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Knowledge disclosure as intellectual property rights protection

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Author Info

  • Ponce, Carlos J.

Abstract

We consider the problem of an inventor who discloses knowledge under the threat of a rival who may patent a competing idea. Disclosure diminishes the probability that the rival has of receiving a patent (legal externality) but it also decreases the rival’s marginal R&D cost (knowledge externality). Our results reveal that: (i) when the knowledge externality is ‘large’ (‘small’) relative to the legal one, an increase (decrease) in the patentability standard leads to higher disclosure and promotes R&D and (ii) if subsequent research creates positive external effects, the patentability standard should be set to promote further disclosure and R&D in equilibrium. The impact on the equilibrium configuration of changes in market profits is also examined.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Economic Behavior & Organization.

Volume (Year): 80 (2011)
Issue (Month): 3 ()
Pages: 418-434

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Handle: RePEc:eee:jeborg:v:80:y:2011:i:3:p:418-434

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Web page: http://www.elsevier.com/locate/jebo

Related research

Keywords: Disclosure; Legal externality; Knowledge externality; Transfer effect; Threat effect; Patentability standard; Market premium;

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References

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  1. Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
  2. David Gill, 2004. "Strategic Disclosure of Intermediate Research Results," Economics Series Working Papers 211, University of Oxford, Department of Economics.
  3. Vincenzo Denicolo & Luigi Alberto Franzoni, 2004. "Patents, Secrets, and the First-Inventor Defense," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 13(3), pages 517-538, 09.
  4. James J. Anton & Dennis A. Yao, 2003. "Patents, Invalidity, and the Strategic Transmission of Enabling Information," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(2), pages 151-178, 06.
  5. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-51, Spring.
  6. d' Aspremont, Claude & Bhattacharya, Sudipto & Gerard-Varet, Louis-Andre, 2000. "Bargaining and Sharing Innovative Knowledge," Review of Economic Studies, Wiley Blackwell, vol. 67(2), pages 255-71, April.
  7. James J. Anton & Dennis A. Yao, 2007. "Finding "Lost" Profits: An Equilibrium Analysis of Patent Infringement Damages," Journal of Law, Economics and Organization, Oxford University Press, vol. 23(1), pages 186-207, April.
  8. James J. Anton & Dennis A. Yao, 2004. "Little Patents and Big Secrets: Managing Intellectual Property," RAND Journal of Economics, The RAND Corporation, vol. 35(1), pages 1-22, Spring.
  9. Aoki, Reiko & Spiegel, Yossi, 2009. "Pre-grant patent publication and cumulative innovation," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 333-345, May.
  10. Suzanne Scotchmer & Jerry Green, 1990. "Novelty and Disclosure in Patent Law," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 131-146, Spring.
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Citations

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Cited by:
  1. Della Malva, Antonio & Hussinger, Katrin, 2010. "Corporate science in the patent system: An analysis of the semiconductor technology," ZEW Discussion Papers 10-098, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  2. Boldrin, Michele & Levine, David K., 2004. "Rent-seeking and innovation," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 127-160, January.

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