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Dynamic Effects of Patent Policy on Sequential Innovation

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  • Bonwoo Koo
  • Brian D. Wright

Abstract

"When one patented innovation enables another, endogenous delay of the latter has important implications for the economics of patent life and scope, if licensing is negotiated ex post . Optimal patent life may be finite under competition, even if the royalty imposes no deadweight loss and there is no competitive dissipation of rent. Reduced scope of the first patent eliminates delay of costly enabled innovations, whether monopolized or competitive, and a combination of limited scope and infinite life can be optimal. If the second innovation is negotiated ex ante , its patentability can increase or decrease the first innovator's profit, depending on cost and market structure of the second innovation, and patent life". Copyright (c) 2010 Wiley Periodicals, Inc..

Suggested Citation

  • Bonwoo Koo & Brian D. Wright, 2010. "Dynamic Effects of Patent Policy on Sequential Innovation," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 19(2), pages 489-512, June.
  • Handle: RePEc:bla:jemstr:v:19:y:2010:i:2:p:489-512
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    1. repec:eee:indorg:v:56:y:2018:i:c:p:204-228 is not listed on IDEAS
    2. Lence, Sergio H. & Hayes, Dermot J. & Alston, Julian & Smith, J. Stephen C., 2015. "Intellectual Property in Plant Breeding: Comparing Different Levels and Forms of Protection," Staff General Research Papers Archive 38978, Iowa State University, Department of Economics.
    3. Lu, Louis Y.Y. & Liu, John S., 2016. "A novel approach to identify the major research themes and development trajectory: The case of patenting research," Technological Forecasting and Social Change, Elsevier, vol. 103(C), pages 71-82.
    4. Haejun Jeon, 2016. "Patent litigation and cross licensing with cumulative innovation," Journal of Economics, Springer, vol. 119(3), pages 179-218, November.
    5. repec:eee:jeborg:v:137:y:2017:i:c:p:282-303 is not listed on IDEAS

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