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Imitation, patent protection and welfare

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Author Info
Arijit Mukherjee () (Department of Economics, Keele University, Keele,)
Enrico Pennings (Universitat Pompeu Fabra, Spain)

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Abstract

Once a new technology has been invented, there is a credible threat of imitation when patent protection is strong and imitation cost is low. Within the area of credible imitation, the innovator has an incentive to postpone technology adoption when the cost of imitation is relatively high. The possibility of licensing, however, eliminates or at least reduces the incentive for delayed technology adoption and may increase or decrease social welfare. Further, this paper explains the possibility of a forward contract on licensing.

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File URL: http://www.keele.ac.uk/depts/ec/wpapers/0103.pdf
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Publisher Info
Paper provided by Department of Economics, Keele University in its series Keele Department of Economics Discussion Papers (1995-2001) with number 2001/03.

Download reference. The following formats are available: HTML (with abstract), plain text (with abstract), BibTeX, RIS (EndNote, RefMan, ProCite), ReDIF
Length: 25 pages
Date of creation: Jun 2001
Date of revision:
Publication status: Published in Volume 56, Number 4, October 2004, pp. 715-733. [ doi:10.1093/oep/gpf062 ]
Handle: RePEc:kee:keeldp:2001/03

Note: This is a revised and improved version of the working paper of the authors in ECIS under the same title. We would like to thank the participants of E.A.R.I.E. conference, 2000, and particularly, Vincenzo Denicolo for helpful comments and suggestions. Arijit Mukherjee also thanks Robin Bladen-Hovell, Paul de Hek, Roger Hartley and Tim Worrall for helpful discussions and acknowledges the financial support from the Netherlands Technology Foundation (STW).
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Postal: Department of Economics, University of Keele, Keele, Staffordshire, ST5 5BG - United Kingdom
Phone: +44 (0)1782 584581
Fax: +44 (0)1782 717577
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Web page: http://www.keele.ac.uk/depts/ec/cer/
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Postal: Department of Economics, Keele University, Keele, Staffordshire ST5 5BG - United Kingdom
Email:
Web: http://www.keele.ac.uk/depts/ec/cer/pubs_kerps.htm

For technical questions regarding this item, or to correct its listing, contact: (Martin E. Diedrich).

Related research
Keywords: Imitation; Innovation; Licensing; Patent Protection; Welfare;

Other versions of this item:

Find related papers by JEL classification:
D45 - Microeconomics - - Market Structure and Pricing - - - Rationing; Licensing
L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Deardorff, Alan V, 1992. "Welfare Effects of Global Patent Protection," Economica, London School of Economics and Political Science, vol. 59(233), pages 35-51, February. [Downloadable!] (restricted)
  2. Arijit Mukherjee & Enrico Pennings, 2001. "Imitation, patent protection and welfare," Keele Department of Economics Discussion Papers (1995-2001) 2001/03, Department of Economics, Keele University. [Downloadable!]
    Other versions:
  3. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-18, December. [Downloadable!] (restricted)
  4. Choi, Jay Pil & Thum, Marcel, 1998. "Market structure and the timing of technology adoption with network externalities," European Economic Review, Elsevier, vol. 42(2), pages 225-244, February. [Downloadable!] (restricted)
    Other versions:
  5. Caniëls; M.C.J. & Verspagen; B., 1999. "Spatial distance in a technology gap model," ECIS Working Papers 99.10, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
    Other versions:
  6. Onno Lint & Enrico Pennings, 2002. "The V-shaped value evolution of R&D-projects," Vlerick Leuven Gent Management School Working Paper Series 2002-5, Vlerick Leuven Gent Management School. [Downloadable!]
  7. Bongenaar, B. & Szirmai, A., 1999. "The Role of a Research and Development Institute in the Development and Diffusion of Technology," ECIS Working Papers 99.9, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
  8. Mazzoleni, Roberto & Nelson, Richard R., 1998. "The benefits and costs of strong patent protection: a contribution to the current debate," Research Policy, Elsevier, vol. 27(3), pages 273-284, July. [Downloadable!] (restricted)
  9. Gallini, Nancy T, 1984. "Deterrence by Market Sharing: A Strategic Incentive for Licensing," American Economic Review, American Economic Association, vol. 74(5), pages 931-41, December. [Downloadable!] (restricted)
  10. Fagerberg, Jan & Verspagen, Bart, 1998. "Productivity, R&D Spillovers and Trade," ECIS Working Papers 98.2, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
    Other versions:
  11. Hagedoorn,John & Duysters,Geert, 2000. "The Effect of Mergers and Acquisitions on the Technological Performance of Companies in a High-tech Environment," Research Memoranda 010, Maastricht : MERIT, Maastricht Economic Research Institute on Innovation and Technology. [Downloadable!]
    Other versions:
  12. Michael L. Katz & Carl Shapiro, 1985. "On the Licensing of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 16(4), pages 504-520, Winter. [Downloadable!] (restricted)
  13. Caniëls, M.C.J. & Verspagen, B., 1999. "The effects of economic integration on regional growth, an evolutionary model," ECIS Working Papers 99.13, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
    Other versions:
  14. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(1987-3), pages 783-832. [Downloadable!]
  15. Benoit, Jean-Pierre, 1985. "Innovation and Imitation in a Duopoly," Review of Economic Studies, Blackwell Publishing, vol. 52(1), pages 99-106, January. [Downloadable!] (restricted)
  16. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation, Yale University. [Downloadable!]
  17. Mukherjee, Arijit & Balasubramanian, N., 2001. "Technology transfer in a horizontally differentiated product market," Research in Economics, Elsevier, vol. 55(3), pages 257-274, September. [Downloadable!] (restricted)
    Other versions:
  18. Tuomas Takalo, 1998. "Innovation and imitation under imperfect patent protection," Journal of Economics, Springer, vol. 67(3), pages 229-241, October. [Downloadable!] (restricted)
  19. Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring. [Downloadable!] (restricted)
  20. Lint, O. & Pennings, E., 2000. "The recently chosen digital video standard: playing the game within the game," ECIS Working Papers 00.02, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Aken, van J.E., 2001. "Management research based on the paradigm of the design sciences: the quest for tested and grounded technological rules," ECIS Working Papers 01.11, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
  2. Mukherjee, A. & Pennings, E., 2000. "Imitation, patent protection and welfare," ECIS Working Papers 00.03, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
    Other versions:
  3. Verspagen, B. & Schoenmakers, W., 2000. "The spatial dimension of knowledge spillovers in Europe: evidence from firm patenting data," ECIS Working Papers 00.07, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
    Other versions:
  4. Arijit Mukherjee, 2002. "R&D, Licensing and Patent Protection," Keele Economics Research Papers KERP 2002/01, Centre for Economic Research, Keele University. [Downloadable!]
    Other versions:
  5. Verspagen, B., 2000. "Growth and structural change: trends, patterns and policy options," ECIS Working Papers 00.08, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
    Other versions:
  6. Lint, O. & Pennings, E., 2000. "The recently chosen digital video standard: playing the game within the game," ECIS Working Papers 00.02, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
  7. Aken, van J., 2001. "Improving the relevance of management research By developing tested and grounded technologiCAL RULES," ECIS Working Papers 01.19, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
  8. Marsili, O., 2000. "Technological regimes and sources of entrepreneurship," ECIS Working Papers 00.10, Eindhoven Centre for Innovation Studies, Eindhoven University of Technology. [Downloadable!]
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