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Protecting Early Innovators: Should Second-Generation Products Be Patentable?

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  • Suzanne Scotchmer

Abstract

Incentives to develop basic technologies are greater if the patentholder profits from applications or other second-generation products. Assuming that such products infringe the basic patent and that there is not much delay between the innovations, I argue that (i) patents on second-generation products are not necessary to encourage their development and (ii) the patentholder of the basic technology collects a larger share of the profit if applications or other second generation products are not patentable.

Suggested Citation

  • Suzanne Scotchmer, 1996. "Protecting Early Innovators: Should Second-Generation Products Be Patentable?," RAND Journal of Economics, The RAND Corporation, vol. 27(2), pages 322-331, Summer.
    • Handle: RePEc:rje:randje:v:27:y:1996:i:summer:p:322-331
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