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Sequential Innovations and Intellectual Property Rights

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  • Payot, Frederic
  • Szalay, Dezso

Abstract

We analyze a two-stage patent race. In the Örst phase Örms seek to develop a research tool, an innovation that has no commercial value but is necessary to enter the second phase of the race. The Örm that completes the second phase of the race Örst obtains a patent on the Önal innnovation and enjoys its proÖts. We ask whether patent protection for the innovator of the research tool is beneÖcial from the ex ante point of view. We show that there is a range of values of the final innovation such that Örms prefer to have no Intellectual Property Rights for research tools.

Suggested Citation

  • Payot, Frederic & Szalay, Dezso, 2008. "Sequential Innovations and Intellectual Property Rights," Economic Research Papers 269862, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269862
    DOI: 10.22004/ag.econ.269862
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    References listed on IDEAS

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    JEL classification:

    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • L00 - Industrial Organization - - General - - - General

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