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Keeping Secrets: The Economics of Access Deterrence

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  • Emeric Henry
  • Francisco Ruiz-Aliseda

Abstract

Keeping valuable secrets requires costly protection efforts. Breaking them requires costly search efforts. In a dynamic model in which the value of the secret decreases with the number of those holding it, we examine the secret holders' protection decisions and the secret breakers' timing of entry, showing that the original secret holder's payoff can be very high, even when protection appears weak, with implications for innovators' profits from unpatented innovations. We show that the path of entry will be characterized by two waves, the first of protected entry followed by a waiting period, and a second wave of unprotected entry.

Suggested Citation

  • Emeric Henry & Francisco Ruiz-Aliseda, 2016. "Keeping Secrets: The Economics of Access Deterrence," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 95-118, August.
    • Handle: RePEc:aea:aejmic:v:8:y:2016:i:3:p:95-118
    Note: DOI: 10.1257/mic.20140190
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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Billette de Villemeur, Etienne & Ruble, Richard & Versaevel, Bruno, 2015. "On the timing of innovation and imitation," MPRA Paper 69161, University Library of Munich, Germany.
    2. repec:hal:spmain:info:hdl:2441/d3pr45c1e8egae1q88dc5jo6u is not listed on IDEAS
    3. Mohamed Mabrouki, 2018. "Supporting economic growth through innovation: How does human capital influence the rate of growth?," Economics Bulletin, AccessEcon, vol. 38(2), pages 957-972.
    4. Benoît, Jean-Pierre & Galbiati, Roberto & Henry, Emeric, 2017. "Investing to cooperate: Theory and experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 144(C), pages 1-17.
    5. Michael Klein & Yibai Yang, 2024. "Blocking Patents, Rent Protection and Economic Growth"," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 52, pages 1-20, April.
    6. Jonathan F. Lee, 2017. "Measuring Innovation with Patents when Patenting is Strategic," 2017 Papers ple823, Job Market Papers.
    7. Mohamed MABROUKI, 2018. "What Kind Of Intellectual Propfrty Regime Is More Favorable To Innovation: With Or Without A Patent?," Journal of Smart Economic Growth, , vol. 3(1), pages 77-95, Juin.
    8. repec:hal:spmain:info:hdl:2441/59r8grug28881rf8or7715f88g is not listed on IDEAS
    9. Mabrouki, Mohamed, 2018. "Le brevet : un instrument efficace pour promouvoir l’innovation au profit de la croissance ou un mal nécessaire ? [Patent: an effective instrument to promote innovation for the benefit of growth or," MPRA Paper 85752, University Library of Munich, Germany.
    10. Billette de Villemeur, Etienne & Ruble, Richard & Versaevel, Bruno, 2016. "When should a winner take all, or pay some? Innovation and imitation incentives in a dynamic duopoly," MPRA Paper 75465, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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