So, what drives a firm's ability to appropriate value?
Well, I encourage you to think about two broad classes of considerations here.
The first is the strength of the intellectual property regime.
Your ability to protect your intellectual property.
Now, this depends on a number of factors which we'll talk about more later, but,
in general, you can think about things like the nature of the legal system.
Do I have a patent protection on this or a copyright?
But, also the nature of the technology and the market itself
which might provide protection beyond even a patent or some other legal protection.
The second thing we wanna think about are complementary assets.
These are these things necessary to exploit the innovation.
This could be marketing, distribution channels, maybe a complementary technology
that is require to make an advance with this innovation.
Who controls these complementary assets has a very big opportunity
to take a value from the innovation that's created.
So from the innovator's perspective,
you need to think about not only can you protect your intellectual property, but
do you have some control over these important complementary assets as well?