Anticommons and Optimal Patent Policy in a Model of Sequential Innovation
AbstractWe present a model of sequential innovation in which an innovator uses several research inputs to invent a new good. These inputs, in turn, must be invented before they can be used by the final innovator. As a consequence, the degree of patent protection affects the revenues and cost of the innovator, but also determines the incentives to invent the research inputs in the first place. We study the effects of increases in the number of required inputs on innovation activity and optimal patent policy. We find that the probability of introducing the final innovation decreases (increases) as the number of inputs increases when inputs are complements (substitutes). We also find that the optimal strength of patents on research inputs is increasing in the degree of substitution between the inputs, but decreasing in the number of inputs for any degree of substitution.
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Bibliographic InfoPaper provided by Harvard Business School in its series Harvard Business School Working Papers with number 09-148.
Length: 36 pages
Date of creation: Jun 2009
Date of revision:
Other versions of this item:
- Llanes Gastón & Trento Stefano, 2011. "Anticommons and Optimal Patent Policy in a Model of Sequential Innovation," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 11(1), pages 1-27, August.
- Gaston Llanes & Stefano Trento, 2007. "Anticommons and optimal patent policy in a model of sequential innovation," Economics Working Papers we076838, Universidad Carlos III, Departamento de Economía.
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
- L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
- D4 - Microeconomics - - Market Structure and Pricing
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-07-11 (All new papers)
- NEP-INO-2009-07-11 (Innovation)
- NEP-IPR-2009-07-11 (Intellectual Property Rights)
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