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Sequential innovation, patents, and imitation

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  • James Bessen
  • Eric Maskin

Abstract

We argue that when innovation is “sequential” (so that each successive invention builds in an essential way on its predecessors) and “complementary” (so that each potential innovator takes a different research line), patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such protection. Furthermore, an inventor's prospective profit may actually be enhanced by competition and imitation. Our sequential model of innovation appears to explain evidence from a natural experiment in the software industry.

Suggested Citation

  • James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635, December.
    • Handle: RePEc:bla:randje:v:40:y:2009:i:4:p:611-635
    DOI: 10.1111/j.1756-2171.2009.00081.x
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