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Fragmented Property Rights and Incentives for R& D

  • Derek J. Clark

    ()

    (Department of Economics and Management, Norwegian College of Fishery Science, University of Tromsø, N-9037 Tromsø, Norway)

  • Kai A. Konrad

    ()

    (Social Science Research Center Berlin (WZB), D-10785 Berlin, Germany and Department of Business and Economics, Free University of Berlin, 14195 Berlin, Germany)

Where product innovation requires several complementary patents, fragmented property rights can limit firms' willingness to invest in R& D. We consider the research intensity in multiple simultaneous R& D contests and how it depends on whether firms already hold relevant patents as well as the availability of an option to invent around. A measure of technological uncertainty is also analyzed. The multiple patent product involves an important hold-up problem that can reduce the overall R& D effort. Invent-around options moderate this problem. We also analyze targeted equilibria in which the aim of R& D can be to hold up a rival.

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File URL: http://dx.doi.org/10.1287/mnsc.1080.0873
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Article provided by INFORMS in its journal Management Science.

Volume (Year): 54 (2008)
Issue (Month): 5 (May)
Pages: 969-981

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Handle: RePEc:inm:ormnsc:v:54:y:2008:i:5:p:969-981
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  1. David Encaoua & Dominique Guellec & Catalina Martínez, 2006. "Patent Systems for Encouraging Innovation: Lessons from Economic Analysis," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00177614, HAL.
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  5. repec:hal:journl:halshs-00177614 is not listed on IDEAS
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  7. Josh Lerner & Jean Tirole, 2002. "Efficient Patent Pools," NBER Working Papers 9175, National Bureau of Economic Research, Inc.
  8. Kultti, Klaus & Takalo, Tuomas, 2008. "Optimal fragmentation of intellectual property rights," International Journal of Industrial Organization, Elsevier, vol. 26(1), pages 137-149, January.
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  10. Suzanne Scotchmer, 1996. "Protecting Early Innovators: Should Second-Generation Products Be Patentable?," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 322-331, Summer.
  11. Bruno Cassiman & Reinhilde Veugelers, 2006. "In Search of Complementarity in Innovation Strategy: Internal R& D and External Knowledge Acquisition," Management Science, INFORMS, vol. 52(1), pages 68-82, January.
  12. Kingston, William, 2001. "Innovation needs patents reform," Research Policy, Elsevier, vol. 30(3), pages 403-423, March.
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