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Anticommons and optimal patent policy in a model of sequential innovation

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  • Llanes, Gastón
  • Trento, Stefano

Abstract

When innovation is sequential, the development of new products depends on the access to previous discoveries. As a consequence the patent system affects both the revenues and the cost of the innovator. We construct a model of sequential innovation in which an innovator uses n patented inputs in R&D to invent a new product. We ask three questions: (i) what is the net effect of patents on innovation as technologies become more complex (n increases)? (ii) are patent pools welfare enhancing? (iii) what is the optimal response of patent policy as technological complexity increases? We find that the answers to these questions depend on the degree of complementarity and substitutability between the inputs used in research.

Suggested Citation

  • Llanes, Gastón & Trento, Stefano, 2007. "Anticommons and optimal patent policy in a model of sequential innovation," UC3M Working papers. Economics we076838, Universidad Carlos III de Madrid. Departamento de Economía.
  • Handle: RePEc:cte:werepe:we076838
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    1. Gastón Llanes & Stefano Trento, 2012. "Patent policy, patent pools, and the accumulation of claims in sequential innovation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 703-725, August.
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    1. Gastón Llanes & Stefano Trento, 2012. "Patent policy, patent pools, and the accumulation of claims in sequential innovation," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 50(3), pages 703-725, August.

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    Keywords

    Anticommons;

    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
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L41 - Industrial Organization - - Antitrust Issues and Policies - - - Monopolization; Horizontal Anticompetitive Practices
    • D4 - Microeconomics - - Market Structure, Pricing, and Design

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