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Patent Litigation as an Information Transmission Mechanism

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  • Choi, J.P.

    (Tilburg University, Center for Economic Research)

Abstract

Patent litigation reveals important information about the validity of the contested patent to other potential entrants. This paper explores the implications of such informational externalities for entry dynamics in the presence of multiple potential entrants. The nature of the entry game can be one of either waiting or preemption depending on the degree of patent protection. Therefore, the payoffs for the patentee and the initial imitator are discontinuous in the degree of patent protection. Furthermore, strengthening intellectual property rights is not necessarily desirable for the patentee. The analysis may also help explain the apparently puzzling practice of delaying patent suits. Copyright 1998 by American Economic Association.

(This abstract was borrowed from another version of this item.)

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Paper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 1997-17.

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Date of creation: 1997
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Handle: RePEc:dgr:kubcen:199717

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  1. Kreps, David M. & Wilson, Robert, 1982. "Reputation and imperfect information," Journal of Economic Theory, Elsevier, vol. 27(2), pages 253-279, August.
  2. Boyan Jovanovic & Glenn MacDonald, 1993. "Competitive Diffusion," NBER Working Papers 4463, National Bureau of Economic Research, Inc.
  3. Macdonald, G.M., 1988. "Competitive Diffusion," University of Chicago - Economics Research Center 88-10, Chicago - Economics Research Center.
  4. Waterson, Michael, 1990. "The Economics of Product Patents," American Economic Review, American Economic Association, vol. 80(4), pages 860-69, September.
  5. Reiko Aoki & Jin-Li Hu, 1996. "Licensing vs. Litigation: Effect of the Legal System on Incentives to Innovate," Industrial Organization 9612002, EconWPA.
  6. Horstmann, Ignatius & MacDonald, Glenn M & Slivinski, Alan, 1985. "Patents as Information Transfer Mechanisms: To Patent or (Maybe) Not to Patent," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 837-58, October.
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