A paper explores a matrix on rent seeking behavior in innovation markets.

It's a good step, but gets something key wrong, that is the DPT matrix here isn't "rent seeking propertization against cooperation" but "rent on innovation against rent on channel."

That is new companies have innovations they want to rent to others, old companies have things like brand equity. The innovator wants to pry open the channel in order to gain rental advantage over later waves of innovators and to liquidate previous rents. Large competitors are willing to give ideas away for free, in order to protect channel. Under this matrix regime there is a dominant strategy for socially best outcomes only if there is a means to amortize rent from channel over the same time match as the rent from intellectual capital.

To see this consider innovators and channel holders as rent seekers with a strategic matrix. That means they can cooperate in rent behavior, they can non-cooperate.

This produces a strategic matrix. Since the pay off in rent is based on the ability of each to deny payment to the other, without securing payment for themselves, (lemma: show that rent seeking behavior is compliance dependent, and therefore relies on adverse suicide) we can then say the matrix is neither a stag hunt nor a prisoner's dilemma, since benefit relies solely on the other's action.

Instead the matrix is a cooperation game. For the first moving player then, there must be feedback to cooperation. Example, the ultimatum game, the first player offers so much of an initial payout, but only keeps any of it, if the offer is accepted. Now take a population of players with N as their "bottom line." In a single iteration game, the advantage is for first players to seek partners with the lowest N. To simply take an initial of 10. This is the channel owner, think IBM, or Harper's Weekly, or any thing with a channel that must find ideas to sell down that channel, but which can charge for the channel itself. Take a population of innovators. The first strategy is to suck dry the innovators who will accept the lowest payment. The creators who will create for the joy of it. However, this reduces to the classic fool/grudge paradigm. First all the fools are burned through, and the non-cooperating first players clean up, then the fools all go broke - they run out of money and leave the game. When this happens what is left are grudges, and the grudges hate the channel providers that ripped them off with consistently low offers.

So the first round of the "screw them" strategy will go through all the low N matrix players.

Now iterate, with each round the lowest innovators will first get the money, then crash. Thus a constant round of chaos for the channel provider. But since the value of a channel is consistency, the coalition of Low offer/low accept innovative rent regimes will occupy the channel niche where newness itself is the value of the channel. Think the record business, which sells two to three albums by the latest androgenous boy band or flat chested vixen, then tosses them out. They just need fresh faces. This then is the "innovator cooperates, channel provider betrays" model - since the innovator is never getting enough for rent. The innovator hopes that the strategy matrix is a mixed strategy: offer for free, get a rental advantage which can then be charged for. This is a low percentage strategy. For every writer, singer, actor who makes it, most splatter. For this strategy to work then fractal of the iterated matrix must have an inflection point which is exogenous to the game, that is the dead variables of pay off have to change. This is the first indication that the single iteration version of this game is insufficient.

Another strategy is for channel providers to seek those like themeselves, that is cooperators. They will offer enough from the beginning. However they can be betrayed, first if the innovator doesn't actually offer an innovation, for example if the supposed innovator is really a channel provider that is playing the "screw them" game and hopes to arbitrage cheap ideas into expensive ideas by channel ownership. Think a venture capitalist. This can only be enforced by multiple pays, and the exogenous output is the return.

The third strategy is high N innovators. Innovators that make a high offer the price of playing with them, this can only work if there are enough plays or enough channel owners, or an exogenous input of the amount given.

This creates then the full fractal: the initial offer must be seen as being an input of previous offer/acceptance strategies, or there must be an input from exogenous sources.

Therefore the inflection in the matrix is the variation in exogenous input, and the relationship of that payment to time. This creates the match in time of innovation to time to channel.