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Optimal Patent Design and the Diffusion of Innovations

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  • Carmen Matutes
  • Pierre Regibeau
  • Katharine Rockett

Abstract

Innovators who have made significant breakthroughs may be tempted to get a head start in developing the applications of a new discovery before commercializing any new product. We consider how this socially undesirable waiting period and the pattern of development of subsequent innovations are affected by two patent protection regimes which we call "length" and "scope" protection. Our main finding is that the scope of the patent, and not its length, is the dimension that should be used to induce early disclosure of fundamental innovations while still preserving firms' incentive to do R&D. Furthermore, the optimal protection increases with rivalry in the markets for applications.

Suggested Citation

  • Carmen Matutes & Pierre Regibeau & Katharine Rockett, 1996. "Optimal Patent Design and the Diffusion of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 60-83, Spring.
  • Handle: RePEc:rje:randje:v:27:y:1996:i:spring:p:60-83
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