A dynamic model of patent portfolio races
We propose a dynamic model of a patent portfolio race in an industry in which innovation is incremental. Two firms compete in prices and in research. We study the Markov perfect (closed-loop) equilibrium of the resulting differential game, identifying a steady state in which firms compete neck and neck. In this equilibrium, innovation rates are inefficiently high from the firms’ viewpoint. The firms are caught in a prisoners’ dilemma and so have an incentive not to enforce their patents aggressively in order to coordinate on a more “cooperative” equilibrium.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Wesley M. Cohen & John P. Walsh, 2008. "Real Impediments to Academic Biomedical Research," NBER Chapters,in: Innovation Policy and the Economy, Volume 8, pages 1-30 National Bureau of Economic Research, Inc.
- Serrano, Roberto & Zapater, Inigo, 1998. "The Three-Legged Race: Cooperating to Compete," Games and Economic Behavior, Elsevier, vol. 22(2), pages 343-363, February.
- Noel, Michael D. & Schankerman, Mark, 2006. "Strategic Patenting and Software Innovation," CEPR Discussion Papers 5701, C.E.P.R. Discussion Papers.
- Ilya Segal & Michael D. Whinston, 2007.
"Antitrust in Innovative Industries,"
American Economic Review,
American Economic Association, vol. 97(5), pages 1703-1730, December.
- Ilya Segal & Michael Whinston, 2005. "Antitrust in Innovative Industries," NBER Working Papers 11525, National Bureau of Economic Research, Inc.
- Siebert, Ralph & von Graevenitz, Georg, 2010. "Jostling for advantage or not: Choosing between patent portfolio races and ex ante licensing," Journal of Economic Behavior & Organization, Elsevier, vol. 73(2), pages 225-245, February.
- Philippe Aghion & Christopher Harris & Peter Howitt & John Vickers, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Review of Economic Studies, Oxford University Press, vol. 68(3), pages 467-492.
- Harris, Christopher & Howitt, Peter & Vickers, John & Aghion, Philippe, 2001. "Competition, Imitation and Growth with Step-by-Step Innovation," Scholarly Articles 12375013, Harvard University Department of Economics.
- Christopher Harris & John Vickers, 1987. "Racing with Uncertainty," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 1-21.
- Michael Noel & Mark Schankerman, 2006. "Strategic Patenting and Software Innovation," CEP Discussion Papers dp0740, Centre for Economic Performance, LSE.
- Michael Noel & Mark Schankerman, 2006. "Strategic Patenting and Software Innovation," STICERD - Economics of Industry Papers 43, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:eee:ecolet:v:117:y:2012:i:3:p:924-927. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dana Niculescu)
If references are entirely missing, you can add them using this form.