Intellectual property disclosure as threat
AbstractThis paper models the disclosure of knowledge as a "threat", useful in ensuring firms keep their commitments. We show that firms holding knowledge are better able to enforce agreements than firms that donât. In markets requiring innovation to make a product, disclosure is a more powerful threat than entry by the punishing firm alone. Occasionally, the punishing firm wonât be able to innovate, making it impossible for it to enter the cheating firmâs market and punish. The punishing firm, however, can through disclosure credibly ensure that one, if not many, firms enter the cheating firmâs market. In the model, firms contract explicitly to exchange knowledge and tacitly to coordinate the introduction of innovations to the marketplace. We find conditions under which firms can self-enforce both agreements. The enforcement conditions are weaker when (1) firms possess knowledge and (2) knowledge is easily transferable to other firms. The disclosure threat has implication for antitrust law generally, which are considered.
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Bibliographic InfoArticle provided by The International Society for Economic Theory in its journal International Journal of Economic Theory.
Volume (Year): 7 (2011)
Issue (Month): 1 (03)
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Other versions of this item:
- Baker, Scott & Lee, Pak Yee & Mezzetti, Claudio, 2008. "Intellectual Property Disclosure as 'Threat'," The Warwick Economics Research Paper Series (TWERPS) 881, University of Warwick, Department of Economics.
- Scott Baker & Pak Yee Lee & Claudio Mezzetti, 2007. "Intellectual Property Disclosure as “Threat”," Discussion Papers in Economics 07/08, Department of Economics, University of Leicester.
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