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On the Social Desirability of Patents for Sequential Innovations in a Vertically Differentiated Market

  • Luca Lambertini

    ()

  • Piero Tedeschi

    ()

We consider a market for vertically differentiated goods where firms enter over time, after having developed innovations characterised by different quality levels. We show that patent height and length interact to determine the ultimate emergence of duopoly. In general, imposing quality improvements on later entrants entails the persistence of monopoly, while a duopoly equilibrium emerges when the second innovator is allowed to produce a sufficiently inferior quality and the patent protection granted to the first innovator is not too long-lasting.

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File URL: http://hdl.handle.net/10.1007/s00712-006-0231-5
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Article provided by Springer in its journal Journal of Economics.

Volume (Year): 90 (2007)
Issue (Month): 2 (March)
Pages: 193-214

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Handle: RePEc:kap:jeczfn:v:90:y:2007:i:2:p:193-214
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  19. Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 29-41, Winter.
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  28. Denicolo, Vincenzo, 1996. "Patent Races and Optimal Patent Breadth and Length," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 249-65, September.
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