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The Impact of Patents and R&D Cooperation on R&D Investments in a Differentiated Goods Industry

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  • Karbowski Adam

    (PhD in Economics, Assistant Professor, Department of Business Economics, Collegium of World Economy, SGH Warsaw School of Economics)

  • Prokop Jacek

    (Professor, Department of Business Economics, Collegium of World Economy, SGH Warsaw School of Economics)

Abstract

In this paper, we consider the impact of patents and R&D cooperation on R&D investments in the oligopolistic industry with differentiated products. Four types of firms’ conduct are investigated: R&D competition without patents, R&D competition with patent protection, R&D cooperation, and the full industry cooperation. The obtained results suggest that patents do not necessarily promote R&D investments due to the existence of so called tournament effects. R&D cooperation stimulates R&D investments, but R&D cooperation provides sufficient incentives to create a full industry cartel. Such a cartel works to the detriment of consumers. Our analysis led us to the conclusion that for a relatively low level of R&D spillovers, the policy-makers should promote R&D competition without patent protection among oligopolistic firms. For a relatively high level of R&D spillovers, R&D cooperation enhances innovation, but the regulator should monitor the market for probable collusion.

Suggested Citation

  • Karbowski Adam & Prokop Jacek, 2020. "The Impact of Patents and R&D Cooperation on R&D Investments in a Differentiated Goods Industry," South East European Journal of Economics and Business, Sciendo, vol. 15(1), pages 122-133, June.
    • Handle: RePEc:vrs:seejeb:v:15:y:2020:i:1:p:122-133:n:10
    DOI: 10.2478/jeb-2020-0010
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    More about this item

    Keywords

    research and development; investments; patents; cooperation; differentiated goods;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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