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Runner-up patents: is monopoly inevitable?

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  • Emeric Henry

    (Département d'économie)

Abstract

Exclusive patents sacrifice product competition to provide firms incentives to innovate. We characterize an alternative mechanism whereby later inventors are allowed to share the patent if they discover within a certain time period of the first inventor. These runner-up patents increase social welfare under very general conditions. Furthermore, we show that the time window during which later inventors can share the patent should become a new policy tool at the disposal of the designer. This instrument will be used in a socially optimal mix with the breadth and length of the patent and could allow sorting between more or less efficient firms.

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Paper provided by Sciences Po in its series Sciences Po publications with number info:hdl:2441/c8dmi8nm4pdjkuc9g8gjo2i2i.

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Date of creation: 2010
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Publication status: Published in Scandinavian Journal od Economics, 2010, vol. 112, pp.417-441
Handle: RePEc:spo:wpmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8gjo2i2i

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  1. Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers.
  2. Denicolo, Vincenzo, 1996. "Patent Races and Optimal Patent Breadth and Length," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 249-65, September.
  3. Scotchmer, suzanne, 1998. "The Independent-Invention Defense in Intellectual Property," Berkeley Olin Program in Law & Economics, Working Paper Series, Berkeley Olin Program in Law & Economics qt2s5174q8, Berkeley Olin Program in Law & Economics.
  4. Glenn C. Loury, 1976. "Market Structure and Innovation," Discussion Papers, Northwestern University, Center for Mathematical Studies in Economics and Management Science 256, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  5. Szymanski, Stefan & Valletti, Tommaso M., 2005. "Incentive effects of second prizes," European Journal of Political Economy, Elsevier, vol. 21(2), pages 467-481, June.
  6. Vincenzo Denicolo & Luigi A. Franzoni, 2010. "On the Winner-Take-All Principle in Innovation Races," Journal of the European Economic Association, MIT Press, MIT Press, vol. 8(5), pages 1133-1158, 09.
  7. Petra Moser, 2003. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World Fairs," NBER Working Papers 9909, National Bureau of Economic Research, Inc.
  8. Benny Moldovanu & Aner Sela, 2001. "The Optimal Allocation of Prizes in Contests," American Economic Review, American Economic Association, vol. 91(3), pages 542-558, June.
  9. La Manna, Manfredi & Macleod, Ross & de Meza, David, 1989. "The case for permissive patents," European Economic Review, Elsevier, vol. 33(7), pages 1427-1443, September.
  10. Hopenhayn, Hugo A & Mitchell, Matthew F, 2001. "Innovation Variety and Patent Breadth," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 152-66, Spring.
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Cited by:
  1. Shapiro, Carl, 2007. "Patent Reform: Aligning Reward and Contribution," Competition Policy Center, Working Paper Series, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley qt1qm754rc, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  2. Emeric Henry, 2010. "Promising the right prize," Sciences Po publications 7758, Sciences Po.

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