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Imitation, patent protection, and welfare

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  • Arijit Mukherjee
  • Enrico Pennings

Abstract

Newly developed technologies run the risk of being imitated when patents are long and imitation cost is low. This paper shows that the innovator has the incentive to postpone technology adoption when imitation is a credible threat but imitation cost is not below a certain threshold. The possibility of licensing eliminates or at least reduces the incentive for delayed technology adoption. Further, this paper explains the advantages of a forward licensing contract versus a simple licensing contract in terms of profits and social welfare. Copyright 2004, Oxford University Press.

Suggested Citation

  • Arijit Mukherjee & Enrico Pennings, 2004. "Imitation, patent protection, and welfare," Oxford Economic Papers, Oxford University Press, vol. 56(4), pages 715-733, October.
    • Handle: RePEc:oup:oxecpp:v:56:y:2004:i:4:p:715-733
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    File URL: http://hdl.handle.net/10.1093/oep/gpf062
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    Cited by:

    1. Leonard F.S. Wang & Arijit Mukherjee, 2014. "Patent Protection, Innovation and Technology Licensing," Australian Economic Papers, Wiley Blackwell, vol. 53(3-4), pages 245-254, December.
    2. Billette de Villemeur, Etienne & Ruble, Richard & Versaevel, Bruno, 2015. "On the timing of innovation and imitation," MPRA Paper 69161, University Library of Munich, Germany.
    3. Siddhartha Bandyopadhyay & Arijit Mukherjee, 2014. "R&D Cooperation with Entry," Manchester School, University of Manchester, vol. 82(1), pages 52-70, January.
    4. Marjit, Sugata & Xu, Xinpeng & Yang, Lei, 2009. "Offshore Outsourcing, Contractual R&D and Intellectual Property in Developing Countries," MPRA Paper 19362, University Library of Munich, Germany.
    5. Billette de Villemeur, Etienne & Ruble, Richard & Versaevel, Bruno, 2014. "Innovation and imitation incentives in dynamic duopoly," MPRA Paper 59453, University Library of Munich, Germany.
    6. Bagchi, Aniruddha & Roy, Abhra, 2011. "Endogenous R&D and Intellectual Property Laws in Developed and Emerging Economies," MPRA Paper 31822, University Library of Munich, Germany.
    7. Arijit Mukherjee, 2014. "Patent protection under endogenous product differentiation," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 21(1), pages 78-93, March.
    8. Billette de Villemeur, Etienne & Ruble, Richard & Versaevel, Bruno, 2016. "When should a winner take all, or pay some? Innovation and imitation incentives in a dynamic duopoly," MPRA Paper 75465, University Library of Munich, Germany.
    9. Arijit Mukherjee & Achintya Ray, 2007. "Patents, imitation and welfare," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 16(3), pages 227-236.
    10. Arijit Mukherjee, 2017. "Patent Protection and R&D with Endogenous Market Structure," Journal of Industrial Economics, Wiley Blackwell, vol. 65(1), pages 220-234, March.
    11. Arijit Mukherjee, 2013. "Patent pool under endogenous technology choice," Discussion Paper Series 2013_07, Department of Economics, Loughborough University, revised Jul 2013.
    12. Yoon, Young-Ro, 2009. "Endogenous timing of actions under conflict between two types of second mover advantage," International Journal of Industrial Organization, Elsevier, vol. 27(6), pages 728-738, November.
    13. Mukherjee, Arijit & Pennings, Enrico, 2011. "Unionization structure, licensing and innovation," International Journal of Industrial Organization, Elsevier, vol. 29(2), pages 232-241, March.
    14. Yi-Fan Chen & Alireza Naghavi & Shin-Kun Peng, 2021. "Learning by supplying and competition threat," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 157(1), pages 121-148, February.
    15. Debasmita Basak & Arijit Mukherjee, 2011. "Unionisation structure and product innovation," Discussion Papers 11/12, University of Nottingham, School of Economics.
    16. Arijit Mukherjee & Achintya Ray, 2014. "Entry, Profit and Welfare under Asymmetric R&D Costs," Manchester School, University of Manchester, vol. 82(3), pages 284-295, June.
    17. Debasmita Basak & Andreas Hoefele & Arijit Mukherjee, 2014. "Union Bargaining Power and Product Innovation: Relevance of the Preference Function," CESifo Working Paper Series 5007, CESifo.
    18. Mukherjee, Arijit, 2006. "Patents and R&D with imitation and licensing," Economics Letters, Elsevier, vol. 93(2), pages 196-201, November.
    19. Aniruddha Bagchi & Abhra Roy, 2012. "Endogenous Research and Development and Intellectual Property Laws in Developed and Emerging Economies," Southern Economic Journal, John Wiley & Sons, vol. 78(3), pages 895-930, January.
    20. Schubert, Stefanie & Jost, Peter-J., 2015. "Beat the gun - protection against zero-profit imitation," VfS Annual Conference 2015 (Muenster): Economic Development - Theory and Policy 113045, Verein für Socialpolitik / German Economic Association.

    More about this item

    JEL classification:

    • D45 - Microeconomics - - Market Structure, Pricing, and Design - - - Rationing; Licensing
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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