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Patent Thicket, Secrecy, and Licensing

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  • Illoong Kwon

    (Seoul National University)

Abstract

This paper considers a patent portfolio race where firms compete for complementary patents, called a patent thicket. When firms have an option to keep their innovation secret, this paper shows that there exists an equilibrium where firms’ patent propensity is strictly between zero and one. In such an equilibrium, stronger patent protection reduces the firms’ investment in innovation. Moreover, this result does not change even when a licensing contract is feasible.

Suggested Citation

  • Illoong Kwon, 2012. "Patent Thicket, Secrecy, and Licensing," Korean Economic Review, Korean Economic Association, vol. 28, pages 27-49.
    • Handle: RePEc:kea:keappr:ker-20120630-28-1-02
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    References listed on IDEAS

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    1. James Bessen & Robert M. Hunt, 2007. "An Empirical Look at Software Patents," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(1), pages 157-189, March.
    2. Kortum, Samuel & Lerner, Josh, 1998. "Stronger protection or technological revolution: what is behind the recent surge in patenting?," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 48(1), pages 247-304, June.
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    9. Illoong Kwon, 2012. "Patent Races with Secrecy," Journal of Industrial Economics, Wiley Blackwell, vol. 60(3), pages 499-516, September.
    10. Horstmann, Ignatius & MacDonald, Glenn M & Slivinski, Alan, 1985. "Patents as Information Transfer Mechanisms: To Patent or (Maybe) Not to Patent," Journal of Political Economy, University of Chicago Press, vol. 93(5), pages 837-858, October.
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    Cited by:

    1. Crass, Dirk & Garcia Valero, Francisco & Pitton, Francesco & Rammer, Christian, 2016. "Protecting innovation through patents and trade secrets: Determinants and performance impacts for firms with a single innovation," ZEW Discussion Papers 16-061, ZEW - Leibniz Centre for European Economic Research.
    2. Crass, Dirk & Valero, Francisco Garcia & Pitton, Francesco & Rammer, Christian, 2019. "Protecting Innovation Through Patents and Trade Secrets: Evidence for Firms with a Single Innovation," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 26(1), pages 117-156.
    3. Paul Belleflamme & Paul Bloch, 2013. "Dynamic Protection of Innovations through Patents and Trade Secrets," CESifo Working Paper Series 4486, CESifo.

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    More about this item

    Keywords

    Patent Thicket; Secrecy; Licensing;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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