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Endogenous Imitation and Implications for Technology Policy

Author

Listed:
  • Vesa Kanniainen
  • Rune Stenbacka

Abstract

We present a theory of socially valuable imitation in a model exhibiting strategic interaction between innovating and imitating firms. Allowing for endogenous imitation calls for substantial revisions of technology policy. There will be underinvestment in imitation from a social point of view when imitation leads to competition which is sufficiently intense. For example, with Cournot competition this holds in industries facing sharply decreasing returns or sufficiently price-sensitive demand; it does not hold in industries operating under constant returns. In the former case, it is socially optimal to subsidize not only innovation but also imitation, though at different rates. Rationally determined imitation makes socially optimal patents longer than suggested by earlier models with non-strategic imitation.

Suggested Citation

  • Vesa Kanniainen & Rune Stenbacka, 2000. "Endogenous Imitation and Implications for Technology Policy," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 156(2), pages 360-360, June.
  • Handle: RePEc:mhr:jinste:urn:sici:0932-4569(200006)156:2_360:eiaift_2.0.tx_2-f
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    Citations

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    Cited by:

    1. Tapio Palokangas, 2005. "Optimal Technology Policy with Imitation and Risk-Averting Households," DEGIT Conference Papers c010_011, DEGIT, Dynamics, Economic Growth, and International Trade.
    2. Grönqvist, Charlotta, 2009. "Empirical studies on the private value of Finnish patents," Scientific Monographs, Bank of Finland, number 2009_041, December.
    3. Katz, Michael L., 2013. "Provider competition and healthcare quality: More bang for the buck?," International Journal of Industrial Organization, Elsevier, vol. 31(5), pages 612-625.
    4. Rune Stenbacka, 2002. "Microeconomic Policies in the New Economy," Finnish Economic Papers, Finnish Economic Association, vol. 15(2), pages 59-75, Autumn.
    5. Tapio Palokangas, 2006. "Competition, Imitation and Growth with Non-Diversifiable Risk," DEGIT Conference Papers c011_036, DEGIT, Dynamics, Economic Growth, and International Trade.
    6. Samano, Mario & Santugini, Marc & Zaccour, Georges, 2017. "Dynamics in research joint ventures and R&D collaborations," Journal of Economic Dynamics and Control, Elsevier, vol. 77(C), pages 70-92.
    7. repec:spr:joptap:v:157:y:2013:i:1:d:10.1007_s10957-012-0156-9 is not listed on IDEAS
    8. Tapio Palokangas, 2011. "Optimal patent length and breadth in an economy with creative destruction and non-diversifiable risk," Journal of Economics, Springer, vol. 102(1), pages 1-27, January.
    9. Lars Wiethaus, 2006. "Cooperation or competition in R&D when innovation and absorption are costly," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(6), pages 569-589.
    10. Ben Youssef, Slim & Breton, Michèle & Zaccour, Georges, 2011. "Cooperating firms in inventive and absorptive research," MPRA Paper 35326, University Library of Munich, Germany.
    11. Reiko Aoki & Jin-Li Hu, 2003. "Time Factors of Patent Litigation and Licensing," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(2), pages 280-280, June.
    12. Tapio Palokangas, 2009. "Optimal Patent Length and Patent Width for an Economy with Creative Destruction and Non-Diversifiable Risk," DEGIT Conference Papers c014_024, DEGIT, Dynamics, Economic Growth, and International Trade.

    More about this item

    JEL classification:

    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • D43 - Microeconomics - - Market Structure, Pricing, and Design - - - Oligopoly and Other Forms of Market Imperfection
    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General

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