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Patent Races, Product Standards, and International Competition

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  • Richard A. Jensen
  • Marie Thursby

Abstract

We examine anticipatory product standards intended to improve the strategic position of firms in an international patent race where firms do R&D to develop products that are close substitutes. The effects of a standard are shown to depend on the way the standard is specified, which firm develops which product, and on the order in which products are discovered. Simple standards are, in general, time inconsistent because of consumer losses that occur when products ruled out by the standard are discovered before the product set as the standard. A state contingent standard is shown to be time consistent when compulsory licensing by the foreign firm is introduced.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3870.

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Date of creation: Oct 1991
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Publication status: published as International Economic Review, Volume 37, #1, pp. 21-49, February 1996
Handle: RePEc:nbr:nberwo:3870

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  1. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, Elsevier, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  2. Kala Krishna, 1988. "High-Tech Trade Policy," NBER Chapters, National Bureau of Economic Research, Inc, in: Issues in US-EC Trade Relations, pages 285-314 National Bureau of Economic Research, Inc.
  3. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, American Economic Association, vol. 75(3), pages 424-40, June.
  4. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  5. Rachel McCulloch, 1988. "The Challenge to U.S. Leadership in High-Technology Industries (Can the United States Maintain Its Lead? Should It Try?)," NBER Working Papers 2513, National Bureau of Economic Research, Inc.
  6. Fudenberg, Drew & Gilbert, Richard & Stiglitz, Joseph & Tirole, Jean, 1983. "Preemption, leapfrogging and competition in patent races," European Economic Review, Elsevier, Elsevier, vol. 22(1), pages 3-31, June.
  7. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, American Economic Association, vol. 72(3), pages 514-26, June.
  8. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, American Economic Association, vol. 77(5), pages 823-37, December.
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Cited by:
  1. Vitor Trindade & Johannes Moenius, 2007. "Networks, Standards and Intellectual Property Rights," Working Papers, Department of Economics, University of Missouri 0705, Department of Economics, University of Missouri.
  2. Choi, Jay Pil, 1996. "Standardization and experimentation: Ex ante vs. ex post standardization," European Journal of Political Economy, Elsevier, Elsevier, vol. 12(2), pages 273-290, September.
  3. Gandal, Neil & Shy, Oz, 2001. "Standardization policy and international trade," Journal of International Economics, Elsevier, Elsevier, vol. 53(2), pages 363-383, April.
  4. Harald Wiese, 2002. "Strategic Trade Policy in the Presence of Network Effects," German Economic Review, Verein für Socialpolitik, Verein für Socialpolitik, vol. 3(2), pages 155-183, 05.
  5. Klimenko, Mikhail M., 2009. "Policies and international trade agreements on technical compatibility for industries with network externalities," Journal of International Economics, Elsevier, Elsevier, vol. 77(2), pages 151-166, April.
  6. Schneider, Cédric, 2008. "Fences and competition in patent races," International Journal of Industrial Organization, Elsevier, Elsevier, vol. 26(6), pages 1348-1364, November.
  7. Czarnitzki, Dirk & Kraft, Kornelius, 2000. "An empirical test of the asymmetric models on innovative activity: who invests more into R&D - the incumbent or the challenger?," ZEW Discussion Papers, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research 00-10, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

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