Ex-ante licensing in sequential innovations
AbstractThe theoretical literature on the cumulative innovation process has emphasized the role of ex-ante licensing – namely, licensing agreements negotiated before the follow-on innovator has sunk its R&D investment – in mitigating the risk of hold-up of future innovations. In this paper, we consider a patent-holder and a follow-on innovator bargaining over the licensing terms in a context where the former firm is unable to observe the timing of the R&D investment of the latter. We show that the possibilities of restoring the R&D incentives by setting the licensing terms appropriately are severely limited.
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Bibliographic InfoArticle provided by Elsevier in its journal Games and Economic Behavior.
Volume (Year): 73 (2011)
Issue (Month): 2 ()
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Web page: http://www.elsevier.com/locate/inca/622836
Sequential innovation; Patents; Licensing; Intellectual property; Information acquisition;
Find related papers by JEL classification:
- L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
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- Alberto Galasso & Mark Schankerman, 2013. "Patents and Cumulative Innovation: Causal Evidence from the Courts," CEP Discussion Papers dp1205, Centre for Economic Performance, LSE.
- Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring.
- Galasso, Alberto & Schankerman, Mark, 2013. "Patents and Cumulative Innovation:Causal Evidence from the Courts," IIR Working Paper 13-16, Institute of Innovation Research, Hitotsubashi University.
- Petal Jean Hackett, 2012. "Cutting too Close? Design Protection and Innovation in Fashion Goods," CESifo Working Paper Series 3716, CESifo Group Munich.
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