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The independent invention defence in a Cournot duopoly model

Author

Listed:
  • Elisabetta Ottoz

    (Department of Economics)

  • Franco Cugno

    (Department of Economics)

Abstract

Maurer and Scotchmer (2002) pointed out that patents may be inferior to other forms of intellectual property in that the independent invention is not a defence to infringement. The authors' analysis refers to situations in which there is an unlimited number of potential entrants by independent duplication. If independent invention were a defence to infringement, the continual threat of entry would induce the patent-holder to license its technology on terms that commit to a lower output price, and this is where the social benefit lies. In this note we extend the analysis to the case of a single potential entrant when the law impose certain restrictions on the contracts that patent holders and licensees can subscribe. We show that these legal restrictions may be partial substitutes for the continual threat of entry by as yet unidentified subjects.

Suggested Citation

  • Elisabetta Ottoz & Franco Cugno, 2004. "The independent invention defence in a Cournot duopoly model," Economics Bulletin, AccessEcon, vol. 12(5), pages 1-7.
    • Handle: RePEc:ebl:ecbull:eb-04l10005
    as

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    References listed on IDEAS

    as
    1. Nancy Gallini & Suzanne Scotchmer, 2002. "Intellectual Property: When Is It the Best Incentive System?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 51-78, National Bureau of Economic Research, Inc.
    2. Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
    3. Lahiri, Sajal & Ono, Yoshiyasu, 1988. "Helping Minor Firms Reduces Welfare," Economic Journal, Royal Economic Society, vol. 98(393), pages 1199-1202, December.
    4. Nancy T. Gallini & Ralph A. Winter, 1985. "Licensing in the Theory of Innovation," RAND Journal of Economics, The RAND Corporation, vol. 16(2), pages 237-252, Summer.
    5. Klemperer, Paul D, 1988. "Welfare Effects of Entry into Markets with Switching Costs," Journal of Industrial Economics, Wiley Blackwell, vol. 37(2), pages 159-165, December.
    6. Maurer, Stephen M & Scotchmer, Suzanne, 2002. "The Independent Invention Defence in Intellectual Property," Economica, London School of Economics and Political Science, vol. 69(276), pages 535-547, November.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Amisano, Franco & Cassone, Alberto, 2005. "Proprieta' intellettuale e mercati: Il ruolo della tecnologia e conseguenze microeconomiche," POLIS Working Papers 58, Institute of Public Policy and Public Choice - POLIS.

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    More about this item

    Keywords

    Cournot duopoly;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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