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Technology Competition, Cumurative Innovation, and Technological Development Scheme

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  • Masahito Ambashi

    (Institute of Economic Research, Kyoto University)

Abstract

This paper investigates which technological development scheme is desirable in technology competition and cumulative innovation with signiï¬ cant uncertainty included in the follow-on innovation. Technology competition is likely to generate a socially overincentive for innovation especially when consumer surplus is negligible. This paper ï¬ rst ï¬ nds that grant-back clause combined with an appropriate distribution of expected proï¬ ts mitigates the socially overinvestments in both the initial and follow-on technologies, and therefore, improves social welfare. In particular, this paper shows that if a government authority can specify a particular distribution of expected proï¬ ts between the ï¬ rms, the socially optimal investment in the initial technology can be realized. On the other hand, assuming signiï¬ cantly positive consumer surplus instead, this paper reveals that competition in the follow-on technology creates higher social welfare as consumer surplus is large.

Suggested Citation

  • Masahito Ambashi, 2021. "Technology Competition, Cumurative Innovation, and Technological Development Scheme," KIER Working Papers 1065, Kyoto University, Institute of Economic Research.
    • Handle: RePEc:kyo:wpaper:1065
    as

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    References listed on IDEAS

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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    technology competition; cumulative innovation; initial and follow-on technologies; technological development scheme; grant-back clause;
    All these keywords.

    JEL classification:

    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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