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On Competition and the Strategic Management of Intellectual Property in Oligopoly

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  • Jos Jansen

Abstract

An innovative firm with private information about its indivisible process innovation chooses strategically whether to apply for a patent with probabilistic validity or rely on secrecy. By doing so, the firm manages its rivals’ beliefs about the size of the innovation, and affects the incentives in the product market. A Cournot competitor tends to patent big innovations, and keep small innovations secret, while a Bertrand competitor adopts the reverse strategy. Increasing the number of firms gives a greater (smaller) patenting incentive for Cournot (Bertrand) competitors. Increasing the degree of product substitutability increases the incentives to patent the innovation.

Suggested Citation

  • Jos Jansen, 2011. "On Competition and the Strategic Management of Intellectual Property in Oligopoly," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 20(4), pages 1043-1072, December.
    • Handle: RePEc:bla:jemstr:v:20:y:2011:i:4:p:1043-1072
    DOI: j.1530-9134.2011.00316.x
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    2. Comino, Stefano & Graziano, Clara, 2015. "How many patents does it take to signal innovation quality?," International Journal of Industrial Organization, Elsevier, vol. 43(C), pages 66-79.
    3. Ganguly, Madhuparna, 2021. "Competition and Innovation: the effects of scientist mobility and stronger patent rights," MPRA Paper 107831, University Library of Munich, Germany.
    4. Cuihong Fan & Byoung Jun & Elmar Wolfstetter, 2014. "Licensing a common value innovation when signaling strength may backfire," International Journal of Game Theory, Springer;Game Theory Society, vol. 43(1), pages 215-244, February.
    5. Bernhard Ganglmair & Imke Reimers, 2019. "Visibility of Technology and Cumulative Innovation: Evidence from Trade Secrets Laws," CRC TR 224 Discussion Paper Series crctr224_2019_119v1, University of Bonn and University of Mannheim, Germany.
    6. Serge Pajak, 2016. "Do innovative firms rely on big secrets? An analysis of IP protection strategies with the CIS 4 survey," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 25(5), pages 516-532, July.
    7. Vivek Ghosal & Jiayao Ni, 2015. "Competition and Innovation in Automobile Markets," CESifo Working Paper Series 5504, CESifo.
    8. Bos, Brenda & Broekhuizen, Thijs L.J. & de Faria, Pedro, 2015. "A dynamic view on secrecy management," Journal of Business Research, Elsevier, vol. 68(12), pages 2619-2627.

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