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Are patents strategic barriers to entry?

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  • Langinier, Corinne

Abstract

Patent protection restricts entry rather than preventing it. In case of a process innovation, it forces a potential entrant to sufficiently differentiate his production technology. We investigate whether a patentholder threatened by entry can strategically renew her patent. For low demand, the patent renewal is sufficient 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 Info

Article provided by Elsevier in its journal Journal of Economics and Business.

Volume (Year): 56 (2004)
Issue (Month): 5 ()
Pages: 349-361

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Handle: RePEc:eee:jebusi:v:56:y:2004:i:5:p:349-361

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

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References

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Cited by:
  1. Jinyoung Kim, 2010. "Patent Portfolio Management of Sequential Innovations," Discussion Paper Series 1005, Institute of Economic Research, Korea University.
  2. Kurt R. Brekke & Odd Rune Straume, 2008. "Pharmaceutical Patents: Incentives for R&D or Marketing?," CESifo Working Paper Series 2433, CESifo Group Munich.

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