Optimal patent length and patent breadth in an R&D driven market with evolving consumer preferences: An evolutionary multi-agent based modelling approach
AbstractThe aims of this paper are twofold. The first is to analyse the interaction between research and development (R&D) activities of firms and heterogeneous consumer preferences in structuring the evolution of an industry. The second is to explore the effects of patent life and patent breadth on market outcomes. To answer these research questions, an evolutionary, multi-agent based, sector-level cumulative innovation model is designed. The model addresses supply and demand sides of the market simultaneously with the co-evolution of heterogeneous consumer preferences, heterogeneous firm knowledge bases and technology levels at the micro level. In line with the evolutionary modelling tradition, we have a search algorithm-innovation and imitation of products by firms - a selection of algorithm-revealed preferences of the consumers - and a population of objects in which variation is expressed and on which selection operates: namely, firms (Windrum, 2004). Firms compete on quality and price of their products in an oligopolistic market whereas consumers, constrained by their computational limits, act to maximize their utility with their product choices in a boundedly rational way. There is continuous firm entry and exit depending on the competitive performance of the firms.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT) in its series MERIT Working Papers with number 020.
Date of creation: 2013
Date of revision:
Patents; industrial dynamics; evolutionary economics; agent-based modelling;
Find related papers by JEL classification:
- B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Institutional; Evolutionary
- L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-11-29 (All new papers)
- NEP-COM-2013-11-29 (Industrial Competition)
- NEP-CSE-2013-11-29 (Economics of Strategic Management)
- NEP-EVO-2013-11-29 (Evolutionary Economics)
- NEP-IND-2013-11-29 (Industrial Organization)
- NEP-INO-2013-11-29 (Innovation)
- NEP-IPR-2013-11-29 (Intellectual Property Rights)
- NEP-KNM-2013-11-29 (Knowledge Management & Knowledge Economy)
- NEP-SBM-2013-11-29 (Small Business Management)
- NEP-UPT-2013-11-29 (Utility Models & Prospect Theory)
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.:
- Grossman, Gene M & Helpman, Elhanan, 1991.
"Quality Ladders in the Theory of Growth,"
Review of Economic Studies,
Wiley Blackwell, vol. 58(1), pages 43-61, January.
- Grossman, G.M. & Helpman, E., 1989. "Quality Ledders In The Theory Of Growth," Papers 148, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M. Grossman & Elhanan Helpman, 1991. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
- Ted O'Donoghue & Suzanne Scotchmer & Jacques-François Thisse, 1998.
"Patent Breadth, Patent Life, and the Pace of Technological Progress,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 7(1), pages 1-32, 03.
- O'DONOGHUE, Ted & SCOTCHMER, Suzanne & THISSE, Jacques-François, . "Patent breadth, patent life, and the pace of technological progress," CORE Discussion Papers RP -1314, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Teece, David J., 1993.
"Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy,"
Elsevier, vol. 22(2), pages 112-113, April.
- Teece, David J., 1986. "Profiting from technological innovation: Implications for integration, collaboration, licensing and public policy," Research Policy, Elsevier, vol. 15(6), pages 285-305, December.
- David Encaoua & Dominique Guellec & Catalina Martínez, 2006. "Patent Systems for Encouraging Innovation: Lessons from Economic Analysis," Post-Print halshs-00177614, HAL.
- Thomas Vallée & Murat YıLdızoğlu, 2006.
"Social and technological efficiency of patent systems,"
Journal of Evolutionary Economics,
Springer, vol. 16(1), pages 189-206, April.
- Thomas VALLEE (LEN-C3E) & Murat YILDIZOGLU (E3i, IFReDE-GRES), 2004. "Social and Technological Efficiency of Patent Systems," Cahiers du GRES 2004-11, Groupement de Recherches Economiques et Sociales.
- Dosi, G. & Marengo, L. & Pasquali, C., 2006.
"How much should society fuel the greed of innovators?: On the relations between appropriability, opportunities and rates of innovation,"
Elsevier, vol. 35(8), pages 1110-1121, October.
- Giovanni Dosi & Luigi Marengo & Corrado Pasquali, 2006. "How Much Should Society Fuel the Greed of Innovators? On the Relations between Appropriability, Opportunities and Rates of Innovation," LEM Papers Series 2006/17, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Timothy Dunne & Mark J. Roberts & Larry Samuelson, 1988.
"Patterns of Firm Entry and Exit in U.S. Manufacturing Industries,"
RAND Journal of Economics,
The RAND Corporation, vol. 19(4), pages 495-515, Winter.
- Dunne, T. & Roberts, M.J. & Samuelson, L., 1988. "Pattenrs Of Firm Entry And Exit In U.S. Manufacturing Industries," Papers 1-88-2, Pennsylvania State - Department of Economics.
- Gilbert, R. & Shapiro, C., 1988.
"Optimal Patent Length And Breadth,"
28, Princeton, Woodrow Wilson School - Discussion Paper.
- Raquel Ortega-Argilés & Andries Brandsma, 2009. "EU-US differences in the size of R&D intensive firms," JRC-IPTS Working Papers on Corporate R&D and Innovation 2009-2, Institute of Prospective Technological Studies, Joint Research Centre.
- Encaoua, David & Guellec, Dominique & Martinez, Catalina, 2006.
"Patent systems for encouraging innovation: Lessons from economic analysis,"
Elsevier, vol. 35(9), pages 1423-1440, November.
- David Encaoua & Dominique Guellec & Catalina Martínez, 2006. "Patent Systems for Encouraging Innovation: Lessons from Economic Analysis," UniversitÃ© Paris1 PanthÃ©on-Sorbonne (Post-Print and Working Papers) halshs-00177614, HAL.
- Don E Kash & William Kingston, 2001. "Patents in a world of complex technologies," Science and Public Policy, Oxford University Press, vol. 28(1), pages 11-22, February.
- Marengo, Luigi & Valente, Marco, 2010. "Industry dynamics in complex product spaces: An evolutionary model," Structural Change and Economic Dynamics, Elsevier, vol. 21(1), pages 5-16, March.
- Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring.
- Grossman, G.M. & Helpman, E., 1989.
"Quality Ladders And Product Cycles,"
39-89, Tel Aviv.
- Grossman, G.M. & Helpman, E., 1989. "Quality Ladders And Product Cycles," Papers 152, Princeton, Woodrow Wilson School - Public and International Affairs.
- Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders and Product Cycles," NBER Working Papers 3201, National Bureau of Economic Research, Inc.
- James Bessen & Eric Maskin, 2009.
"Sequential innovation, patents, and imitation,"
RAND Journal of Economics,
RAND Corporation, vol. 40(4), pages 611-635.
- A. Minniti & C.P. Parello & P.S. Segerstrom, 2008.
"A Schumpeterian Growth Model with Heterogenous Firms,"
645, Dipartimento Scienze Economiche, Universita' di Bologna.
- Minniti, A. & Parello, C. & Segerstrom, P. S., 2008. "A Schumpeterian Growth Model with Heterogenous Firms," MPRA Paper 13674, University Library of Munich, Germany.
- Paul Klemperer, 1990.
"How Broad Should the Scope of Patent Protection Be?,"
RAND Journal of Economics,
The RAND Corporation, vol. 21(1), pages 113-130, Spring.
- Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers.
- Luigi Marengo & Corrado Pasquali & Marco Valente & Giovanni Dosi, 2012.
"Appropriability, patents, and rates of innovation in complex products industries,"
Economics of Innovation and New Technology,
Taylor & Francis Journals, vol. 21(8), pages 753-773, November.
- Luigi Marengo & Corrado Pasquali & Marco Valente & Giovanni Dosi, 2009. "Appropriability, Patents, and Rates of Innovation in Complex Products Industries," LEM Papers Series 2009/05, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
- Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
- Howard F. Chang, 1995. "Patent Scope, Antitrust Policy, and Cumulative Innovation," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 34-57, Spring.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ad Notten).
If references are entirely missing, you can add them using this form.