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Pool of Basic Patents and Follow-up Innovations

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  • Langinier, Corinne

Abstract

In a model with two basic innovations that are fundamental to the development of an application, we investigate whether a patent pool can rectify the lack of incentives for developers to invest in applications when basic innovators themselves cannot develop follow-up applications. Furthermore, following Green and Scotchmer (1995), we investigate whether broad basic patents are necessary in order to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadth, or with patents of similarly wide breadth. However, even though patent pools rectify the problem of developers' incentives, they may reduce the incentive for doing basic research.In a model with two basic innovations that are fundamental to the development of an application, we investigate whether a patent pool can rectify the lack of incentives for developers to invest in applications when basic innovators themselves cannot develop follow-up applications. Furthermore, following Green and Scotchmer (1995), we investigate whether broad basic patents are necessary in order to provide enough incentives for basic innovators. We show that patent pools are more likely to be formed with patents of very different breadth, or with patents of similarly wide breadth. However, even though patent pools rectify the problem of developers' incentives, they may reduce the incentive for doing basic research.

Suggested Citation

  • Langinier, Corinne, 2006. "Pool of Basic Patents and Follow-up Innovations," 2006 Annual meeting, July 23-26, Long Beach, CA 21127, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).
    • Handle: RePEc:ags:aaea06:21127
    DOI: 10.22004/ag.econ.21127
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    References listed on IDEAS

    as
    1. Joshua Lerner, 1994. "The Importance of Patent Scope: An Empirical Analysis," RAND Journal of Economics, The RAND Corporation, vol. 25(2), pages 319-333, Summer.
    2. Josh Lerner & Jean Tirole, 2004. "Efficient Patent Pools," American Economic Review, American Economic Association, vol. 94(3), pages 691-711, June.
    3. Jerry R. Green & Suzanne Scotchmer, 1995. "On the Division of Profit in Sequential Innovation," RAND Journal of Economics, The RAND Corporation, vol. 26(1), pages 20-33, Spring.
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    Keywords

    Research and Development/Tech Change/Emerging Technologies;

    JEL classification:

    • K11 - Law and Economics - - Basic Areas of Law - - - Property Law
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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