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Strategic patents and asymmetric litigation costs as entry deterrence instruments

  • Julio R. Robledo

    ()

    (University of Vienna)

To spur innovation, the patent protection system grants the patentee limited monopoly power to recoup his R&D investment, although, in general, allowing the use of the public good "innovation" is socially efficient. But patents and patent threats can also be used strategically, e.g. to deter entry from competitors. This note shows that, besides incumbency, the present patent protection system constitutes an additional strategic instrument that favors the incumbent, because asymmetric litigation costs may deter entry from potential rivals.

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Article provided by AccessEcon in its journal Economics Bulletin.

Volume (Year): 15 (2005)
Issue (Month): 2 ()
Pages: 1-9

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Handle: RePEc:ebl:ecbull:eb-04o30005
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  1. Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers.
  2. Nordhaus, William D, 1969. "An Economic Theory of Technological Change," American Economic Review, American Economic Association, vol. 59(2), pages 18-28, May.
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  4. Yi, Sang-Seung, 1995. "Uncertain innovation and persistence of monopoly revisited," Economics Letters, Elsevier, vol. 49(3), pages 319-322, September.
  5. Lanjouw, Jean O & Schankerman, Mark, 2001. "Characteristics of Patent Litigation: A Window on Competition," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 129-51, Spring.
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  7. Donald Wright, . "Optimal Patent Breadth and Length with Costly Imitation," Discussion Papers 95/7, Department of Economics, University of York.
  8. Tuomas Takalo, 2001. "On the optimal patent policy," Finnish Economic Papers, Finnish Economic Association, vol. 14(1), pages 33-40, Spring.
  9. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-26, June.
  10. Reinganum, Jennifer R., 1982. "Uncertain Innovation and the Persistence of Monopoly," Working Papers 431, California Institute of Technology, Division of the Humanities and Social Sciences.
  11. Waterson, Michael, 1990. "The Economics of Product Patents," American Economic Review, American Economic Association, vol. 80(4), pages 860-69, September.
  12. Denicolo, Vincenzo, 1996. "Patent Races and Optimal Patent Breadth and Length," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 249-65, September.
  13. Nordhaus, William D, 1972. "The Optimum Life on a Patent: Reply," American Economic Review, American Economic Association, vol. 62(3), pages 428-31, June.
  14. Hall, Bronwyn H & Ziedonis, Rosemarie Ham, 2001. "The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 101-28, Spring.
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