Are patents strategic barriers to entry?
AbstractPatent protection restricts entry rather than preventing it. In case of a process innovation, it forces a potential entrant to suï¬ciently diï¬erentiate his production technology. We investigate whether a patentholder threatened by entry can strategically renew her patent. For low demand, the patent renewal is suï¬cient to deter entry, whereas a high demand attracts competitor, even if there is a patent. On the other hand, the renewal decision can signal information to an uninformed entrant whenever the patentholder is informed. This may act as a barrier to entry. Thus, a patent is renewed more frequently in presence of asymmetric information.
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Bibliographic InfoArticle provided by Elsevier in its journal Journal of Economics and Business.
Volume (Year): 56 (2004)
Issue (Month): 5 ()
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