Waiting to Imitate: On the Dynamic Pricing of Knowledge
We study the problem of an inventor who brings to the market an innovation that can be legally imitated. Imitators may “enter” the market by imitating the innovation at a cost or by buying from the inventor the knowledge necessary to reproduce and use the invention. The possibility of contracting dramatically affects the need for patent protection. Our results show that (i) imitators wait to enter the market and the inventor becomes a temporary monopolist; (ii) the inventor sells knowledge through contracts that allow resale by the imitators; and (iii) under certain conditions, the inventor’s payoff increases with the number of imitators.
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Nancy Gallini and Suzanne Scotchmer., 2001.
"Intellectual Property: When Is It the Best Incentive System?,"
Economics Working Papers
E01-303, University of California at Berkeley.
- Nancy Gallini & Suzanne Scotchmer, 2002. "Intellectual Property: When Is It the Best Incentive System?," NBER Chapters, in: Innovation Policy and the Economy, Volume 2, pages 51-78 National Bureau of Economic Research, Inc.
- Gallini, Nancy & Scotchmer, Suzanne, 2001. "Intellectual Property: When Is It the Best Incentive System?," Department of Economics, Working Paper Series qt9wx2c2hz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
- Nancy Gallini & Suzanne Scotchmer, 2003. "Intellectual Property: When is it the Best Incentive System?," Levine's Working Paper Archive 618897000000000532, David K. Levine.
- Nancy Gallini & Suzanne Scotchmer, 2002. "Intellectual Property: When Is It the Best Incentive System?," Law and Economics 0201001, EconWPA.
- Benoit, Jean-Pierre, 1985. "Innovation and Imitation in a Duopoly," Review of Economic Studies, Wiley Blackwell, vol. 52(1), pages 99-106, January.
- Anton, James J & Yao, Dennis A, 1994. "Expropriation and Inventions: Appropriable Rents in the Absence of Property Rights," American Economic Review, American Economic Association, vol. 84(1), pages 190-209, March.
- Katharine E. Rockett, 1990. "Choosing the Competition and Patent Licensing," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 161-171, Spring.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
- Ashish Arora & Andrea Fosfuri & Alfonso Gambardella, 2004. "Markets for Technology: The Economics of Innovation and Corporate Strategy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262511819, June.
- B. Douglas Bernheim, 1984. "Strategic Deterrence of Sequential Entry into an Industry," RAND Journal of Economics, The RAND Corporation, vol. 15(1), pages 1-11, Spring.
- Arora, Ashish & Fosfuri, Andrea, 1999.
"Licensing the Market for Technology,"
CEPR Discussion Papers
2284, C.E.P.R. Discussion Papers.
- Wesley M Cohen & Richard R Nelson & John P Walsh, 2003.
"Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not),"
Levine's Working Paper Archive
618897000000000624, David K. Levine.
- Wesley M. Cohen & Richard R. Nelson & John P. Walsh, 2000. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (or Not)," NBER Working Papers 7552, National Bureau of Economic Research, Inc.
- Gallini, Nancy T, 1984. "Deterrence by Market Sharing: A Strategic Incentive for Licensing," American Economic Review, American Economic Association, vol. 74(5), pages 931-41, December.
- Arundel, Anthony, 2001. "The relative effectiveness of patents and secrecy for appropriation," Research Policy, Elsevier, vol. 30(4), pages 611-624, April.
When requesting a correction, please mention this item's handle: RePEc:ucp:jpolec:doi:10.1086/662721. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Journals Division)
If references are entirely missing, you can add them using this form.