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Pool of Basic Patents and Follow-up Innovations

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  • Langinier, Corinne

Abstract

In a model with two basic innovations that are fundamental to the development of an application, we investigate whether a patent pool can rectify the lack of incentives for developers to invest in applications when basic innovators themselves cannot develop follow-up applications. Furthermore, following Green and Scotchmer (1995), we investigate whether broad basic patents are necessary in order to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadth, or with patents of similarly wide breadth. However, even though patent pools rectify the problem of developers' incentives, they may reduce the incentive for doing basic research.In a model with two basic innovations that are fundamental to the development of an application, we investigate whether a patent pool can rectify the lack of incentives for developers to invest in applications when basic innovators themselves cannot develop follow-up applications. Furthermore, following Green and Scotchmer (1995), we investigate whether broad basic patents are necessary in order to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadth, or with patents of similarly wide breadth. However, even though patent pools rectify the problem of developers' incentives, they may reduce the incentive for doing basic research.

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Bibliographic Info

Paper provided by American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association) in its series 2006 Annual meeting, July 23-26, Long Beach, CA with number 21127.

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Date of creation: 2006
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Handle: RePEc:ags:aaea06:21127

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Keywords: Research and Development/Tech Change/Emerging Technologies;

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  1. Gilbert, Richard J. & Katz, Michael L., 2006. "Should good patents come in small packages? A welfare analysis of intellectual property bundling," International Journal of Industrial Organization, Elsevier, vol. 24(5), pages 931-952, September.
  2. Carl Shapiro, 2004. "Navigating the Patent Thicket: Cross Licenses, Patent Pools and Standard Setting," Levine's Working Paper Archive 122247000000000539, David K. Levine.
  3. Bessen, James, 2004. "Holdup and licensing of cumulative innovations with private information," Economics Letters, Elsevier, vol. 82(3), pages 321-326, March.
  4. Josh Lerner & Jean Tirole, 2002. "Efficient Patent Pools," NBER Working Papers 9175, National Bureau of Economic Research, Inc.
  5. O'DONOGHUE, Ted & SCOTCHMER, Suzanne & THISSE, Jacques-François, . "Patent breadth, patent life, and the pace of technological progress," CORE Discussion Papers RP -1314, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. Adam B. Jaffe & Josh Lerner & Scott Stern, 2001. "Innovation Policy and the Economy, Volume 1," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262600412, December.
  7. Iain M. Cockburn & Samuel Kortum & Scott Stern, 2002. "Are All Patent Examiners Equal? The Impact of Examiner Characteristics," NBER Working Papers 8980, National Bureau of Economic Research, Inc.
  8. Merges, Robert P. & Nelson, Richard R., 1994. "On limiting or encouraging rivalry in technical progress: The effect of patent scope decisions," Journal of Economic Behavior & Organization, Elsevier, vol. 25(1), pages 1-24, September.
  9. Josh Lerner & Jean Tirole & Marcin Strojwas, 2003. "Cooperative Marketing Agreements Between Competitors: Evidence from Patent Pools," NBER Working Papers 9680, National Bureau of Economic Research, Inc.
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