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Anticommons and Optimal Patent Policy in a Model of Sequential Innovation

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  • Llanes Gastón

    ()
    (Pontificia Universidad Católica de Chile)

  • Trento Stefano

    ()
    (Universitat Autònoma de Barcelona)

Abstract

We present a model of sequential innovation in which innovators use several research inputs to invent new goods. We extend work by Shapiro (2001) and Lerner and Tirole (2004) by studying the effects of increases in the number of patented research inputs on innovation incentives and optimal patent policy. We consider not only the effects on the incentives to invent final goods, but also on the incentives to invent research inputs (ex-ante effect). We find increasing complexity has a negative effect on innovation activity in the final goods sector when research inputs are complements. Either limiting market power through weaker patents or reducing the lack of coordination through patent pools may solve this problem. We also find the optimal patent breadth and show it is increasing in the elasticity of substitution between the inputs used in research and decreasing (increasing) in the complexity of the R&D process when research inputs are complements (substitutes).

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File URL: http://www.degruyter.com/view/j/bejeap.2011.11.issue-1/bejeap.2011.11.1.2863/bejeap.2011.11.1.2863.xml?format=INT
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Bibliographic Info

Article provided by De Gruyter in its journal The B.E. Journal of Economic Analysis & Policy.

Volume (Year): 11 (2011)
Issue (Month): 1 (August)
Pages: 1-27

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Handle: RePEc:bpj:bejeap:v:11:y:2011:i:1:n:46

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Cited by:
  1. Gaston Llanes & Stefano Trento, 2009. "Patent policy, patent pools, and the accumulation of claims in sequential innovation," Harvard Business School Working Papers 10-005, Harvard Business School.

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