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Runner-up Patents: Is Monopoly Inevitable?

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  • Emeric Henry

Abstract

Exclusive patents sacrifice product competition to provide firms incentives to innovate. We characterize an alternative mechanism whereby later inventors are allowed to share the patent if they discover within a certain time period of the first inventor. These runner-up patents increase social welfare under very general conditions. Furthermore, we show that the time window during which later inventors can share the patent should become a new policy tool at the disposal of the designer. This instrument will be used in a socially optimal mix with the breadth and length of the patent and could allow sorting between more or less efficient firms. Copyright © The editors of the "Scandinavian Journal of Economics" 2010 .

Suggested Citation

  • Emeric Henry, 2010. "Runner-up Patents: Is Monopoly Inevitable?," Scandinavian Journal of Economics, Wiley Blackwell, vol. 112(2), pages 417-440, June.
  • Handle: RePEc:bla:scandj:v:112:y:2010:i:2:p:417-440
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    References listed on IDEAS

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    1. Petra Moser, 2005. "How Do Patent Laws Influence Innovation? Evidence from Nineteenth-Century World's Fairs," American Economic Review, American Economic Association, pages 1214-1236.
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    Cited by:

    1. Henry, Emeric, 2010. "Promising the right prize," CEPR Discussion Papers 7758, C.E.P.R. Discussion Papers.
    2. Carl Shapiro, 2008. "Patent Reform: Aligning Reward and Contribution," NBER Chapters,in: Innovation Policy and the Economy, Volume 8, pages 111-156 National Bureau of Economic Research, Inc.

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