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Waiting to imitate: on the dynamic pricing of knowledge

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  • Henry, Emeric
  • Ponce, Carlos

Abstract

We study the problem of an inventor who brings to the market an innovation that can be legally copied. Imitators may 'enter' the market by copying the innovation at a cost or by buying from the inventor the knowledge necessary to reproduce and use the invention. The possibility of contracting affects the need for patent protection. Our results reveal that: (i) Imitators wait to enter the market and the inventor becomes a temporary monopolist; (ii) The inventor offers contracts which allow resale of the knowledge acquired by the imitators; (iii) As the pool of potential imitators grows large, the inventor may become a permanent monopolist.

Suggested Citation

  • Henry, Emeric & Ponce, Carlos, 2009. "Waiting to imitate: on the dynamic pricing of knowledge," CEPR Discussion Papers 7511, C.E.P.R. Discussion Papers.
  • Handle: RePEc:cpr:ceprdp:7511
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    References listed on IDEAS

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    Cited by:

    1. repec:eee:eecrev:v:94:y:2017:i:c:p:221-239 is not listed on IDEAS
    2. Benoit, Jean-Pierre & Galbiati, Roberto & Henry, Emeric, 2013. "Rational parasites," CEPR Discussion Papers 9351, C.E.P.R. Discussion Papers.
    3. Emeric Henry & Francisco Ruiz-Aliseda, 2016. "Keeping Secrets: The Economics of Access Deterrence," American Economic Journal: Microeconomics, American Economic Association, vol. 8(3), pages 95-118, August.
    4. Rousakis, Michael, 2012. "Implementation Cycles : Investment-Specific Technological Change and the Length of Patents," The Warwick Economics Research Paper Series (TWERPS) 983, University of Warwick, Department of Economics.
    5. Tuomas Takalo, 2012. "Rationales and Instruments for Public Innovation Policies," Journal of Reviews on Global Economics, Lifescience Global, vol. 1, pages 157-167.
    6. Bronwyn Hall & Christian Helmers & Mark Rogers & Vania Sena, 2014. "The Choice between Formal and Informal Intellectual Property: A Review," Journal of Economic Literature, American Economic Association, vol. 52(2), pages 375-423, June.
    7. Benoît, Jean-Pierre & Galbiati, Roberto & Henry, Emeric, 2017. "Investing to cooperate: Theory and experiment," Journal of Economic Behavior & Organization, Elsevier, vol. 144(C), pages 1-17.
    8. Henry, Emeric & Ruiz-Aliseda, Francisco, 2012. "Innovation Beyond Patents: Technological Complexity as a Protection against Imitation," CEPR Discussion Papers 8870, C.E.P.R. Discussion Papers.
    9. Bronwyn H. Hall & Christian Helmers & Mark Rogers & Vania Sena, 2012. "The Choice between Formal and Informal Intellectual Property: A Literature Review," NBER Working Papers 17983, National Bureau of Economic Research, Inc.
    10. Mabrouki, Mohamed, 2018. "Le brevet : un instrument efficace pour promouvoir l’innovation au profit de la croissance ou un mal nécessaire ?
      [Patent: an effective instrument to promote innovation for the benefit of growth or
      ," MPRA Paper 85752, University Library of Munich, Germany.
    11. repec:ebl:ecbull:eb-18-00138 is not listed on IDEAS
    12. Correia-da-Silva João & Pinho Joana & Vasconcelos Hélder, 2015. "How Should Cartels React to Entry Triggered by Demand Growth?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 15(1), pages 1-47, January.
    13. Leppälä, Samuli, 2013. "Arrow's paradox and markets for nonproprietary information," Cardiff Economics Working Papers E2013/2, Cardiff University, Cardiff Business School, Economics Section.
    14. Julia Cagé & Nicolas Hervé & Marie-Luce Viaud, 2015. "The Production of Information in an Online World," Working Papers 15-05, NET Institute.
    15. Fernandez Donoso, Jose, 2014. "Do complex inventions need less international patent protection?," Economics Letters, Elsevier, vol. 125(2), pages 278-281.

    More about this item

    Keywords

    contracting; knowledge trading; Patents; war of attrition;

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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