Knowledge diffusion under patent with asymmetric firms
We show that if patent protection and trade secrecy generate asymmetric market structure, an innovator may prefer patent protection than trade secrecy even if the diffusion probability is higher under the former but it increases market concentration by preventing some imitators. So, whether an innovator prefers patent protection or trade secrecy depends on the trade-off between the diffusion probability and market concentration.
Volume (Year): 12 (2007)
Issue (Month): 9 ()
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- David D. Friedman & William M. Landes & Richard A. Posner, 1991. "Some Economics of Trade Secret Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 61-72, Winter.
- Bessen, James, 2005. "Patents and the diffusion of technical information," Economics Letters, Elsevier, vol. 86(1), pages 121-128, January.
- Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
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