A Patentability Requirement for Sequential Innovation
AbstractThis article investigates patent protection for a long sequence of innovations where firms repeatedly supersede each other. Incentives for R&D can be insufficient if successful firms earn market profit only until competitors achieve something better. To correct this problem, patents must provide protection against future innovators. This article proposes using a patentability requirement -- a minimum innovation size required for patents. A patentability requirement can stimulate R&D investment and increase dynamic efficiency. Intuitively, requiring firms to pursue larger innovations prolongs market incumbency because larger innovations are harder to achieve, and longer market incumbency implies an increased reward to innovation.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 29 (1998)
Issue (Month): 4 (Winter)
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- Ted O'Donoghue, 1997. "A Patentability Requirement For Sequential Innovation," Discussion Papers 1185, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
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