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Using patents to mislead rivals

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  • Corinne Langinier

Abstract

. Firms claim they do not rely heavily on patents. Yet they patent, as indicated by the large number of patents that are granted. This paper offers a possible resolution to this puzzle. It takes a simplified version of a duopoly innovation race and studies the patenting decision of an innovator who has private information about the improvability of her innovation. It is shown that a firm may use the patenting decision to mislead her rival. Under symmetric information, research can be stimulated but not disclosed. However, under asymmetric information, disclosure is more likely, even though research incentive may be weakened. JEL Classification: 031, L1 De l’utilisation des brevets pour leurrer les concurrents. Les entreprises innovatrices prétendent ne pas compter sur leurs brevets afin de s’approprier les rendements de leurs innovations. Cependant, les firmes brevètent comme l’atteste le nombre de brevets déposés. Nous proposons une explication à cette apparente contradiction. Dans un modèle simplifié de course à l’innovation à deux firmes, nous étudions la décision de breveter d’un innovateur qui a une information privée sur l’améliorabilité de son innovation. Nous montrons que la décision de breveter peut être utilisée afin de leurrer la firme concurrente. Lorsque les deux firmes partagent la même information, bien que la recherche puisse être stimulée, nous montrons qu’elle reste non brevetée et donc non divulguée. Cependant, lorsque l’information est asymmetrique, l’innovateur brevète plus souvent son innovation mais son concurrent a alors moins d’incitation à entreprendre la recherche.

Suggested Citation

  • Corinne Langinier, 2005. "Using patents to mislead rivals," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 38(2), pages 520-545, May.
  • Handle: RePEc:wly:canjec:v:38:y:2005:i:2:p:520-545
    DOI: 10.1111/j.0008-4085.2005.00291.x
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance

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