Innovation, Fast Seconds, and Patent Policy
AbstractWe develop a model of innovation in which entrepreneurs develop a new (differentiated) product market that is subsequently exploited by a well-established firm that "stretches" its brand to enter a new market as "fast second". In this setting, there is a positive externality to the pioneering efforts of the intitial entrants that may well increase with the number of such entrants. We develop a model that exhibits this externality and use it to evaluate the design of patent policy--specifically patent breadth--with a view to encouraging the optimal amount of initial entry.
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Bibliographic InfoPaper provided by Department of Economics, Tufts University in its series Discussion Papers Series, Department of Economics, Tufts University with number 0745.
Date of creation: 2009
Date of revision:
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fast second; product differentiation; contestability;
Find related papers by JEL classification:
- L5 - Industrial Organization - - Regulation and Industrial Policy
- O25 - Economic Development, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-12-19 (All new papers)
- NEP-COM-2009-12-19 (Industrial Competition)
- NEP-ENT-2009-12-19 (Entrepreneurship)
- NEP-INO-2009-12-19 (Innovation)
- NEP-IPR-2009-12-19 (Intellectual Property Rights)
- NEP-TID-2009-12-19 (Technology & Industrial Dynamics)
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