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Information Disclosure in the Renewal of Patents


  • Crampes, C.
  • Langinier, C.


This paper presents a patent choice model allowing strategic decisions in a sequential game with two agents: a patentholder, who perfectly knows thecharasteristics of the market, and a potential entrant who has no information about the value of demand. We study several Perfect Bayesian Equilibria. We show that there exists no separating equilibrium because the incumbent of a high-valued market always has some incentive to mimic the behavior of a firm in a bad market. Consequently, we find equilibria where the incumbent prefers not to pay the renewal fee for the patent hoping that it will be interpreted by the challenger as a signal of low market profitability.

Suggested Citation

  • Crampes, C. & Langinier, C., 1996. "Information Disclosure in the Renewal of Patents," Papers 96.429, Toulouse - GREMAQ.
  • Handle: RePEc:fth:gremaq:96.429

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    References listed on IDEAS

    1. Christian Gollier, 1996. "Repeated Optional Gambles and Risk Aversion," Management Science, INFORMS, vol. 42(11), pages 1524-1530, November.
    2. Duffie Darrell & Rahi Rohit, 1995. "Financial Market Innovation and Security Design: An Introduction," Journal of Economic Theory, Elsevier, vol. 65(1), pages 1-42, February.
    3. Caballe, Jordi & Pomansky, Alexey, 1996. "Mixed Risk Aversion," Journal of Economic Theory, Elsevier, vol. 71(2), pages 485-513, November.
    4. Pratt, John W & Zeckhauser, Richard J, 1987. "Proper Risk Aversion," Econometrica, Econometric Society, vol. 55(1), pages 143-154, January.
    5. Jackson, Matthew & Peck, James, 1991. "Speculation and price fluctuations with private, extrinsic signals," Journal of Economic Theory, Elsevier, vol. 55(2), pages 274-295, December.
    6. David E. Bell, 1988. "The Value of Pre-Decision Side Bets for Utility Maximizers," Management Science, INFORMS, vol. 34(6), pages 797-800, June.
    7. Rothschild, Michael & Stiglitz, Joseph E., 1971. "Increasing risk II: Its economic consequences," Journal of Economic Theory, Elsevier, vol. 3(1), pages 66-84, March.
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    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Karbowski, Adam & Prokop, Jacek, 2013. "Controversy over the economic justifications for patent protection," EconStor Conference Papers 127476, ZBW - German National Library of Economics.
    2. Felix Chan & Dora Marinova & Michael McAleer, 2004. "Trends and volatilities in foreign patents registered in the USA," Applied Economics, Taylor & Francis Journals, vol. 36(6), pages 585-592.
    3. Jinyoung Kim, 2010. "Patent Portfolio Management of Sequential Innovations," Discussion Paper Series 1005, Institute of Economic Research, Korea University.
    4. Jinyoung Kim, 2015. "Patent Portfolio Management of Sequential Innovations: Theory and Empirics," Discussion Paper Series 1504, Institute of Economic Research, Korea University.
    5. Aoki, Reiko & Spiegel, Yossi, 2009. "Pre-grant patent publication and cumulative innovation," International Journal of Industrial Organization, Elsevier, vol. 27(3), pages 333-345, May.
    6. repec:spr:scient:v:55:y:2002:i:2:d:10.1023_a:1019611623033 is not listed on IDEAS
    7. Karbowski, Adam & Prokop, Jacek, 2012. "Kontrowersje związane z ekonomicznym uzasadnieniem ochrony patentowej
      [Controversies over the economic justifications for patent protection]
      ," MPRA Paper 73619, University Library of Munich, Germany.
    8. McAleer, Michael & Chan, Felix & Marinova, Dora, 2007. "An econometric analysis of asymmetric volatility: Theory and application to patents," Journal of Econometrics, Elsevier, vol. 139(2), pages 259-284, August.
    9. Langinier, Corinne, 2004. "Are patents strategic barriers to entry?," Journal of Economics and Business, Elsevier, vol. 56(5), pages 349-361.
    10. Corinne Langinier, 2005. "Using patents to mislead rivals," Canadian Journal of Economics, Canadian Economics Association, vol. 38(2), pages 520-545, May.
    11. Aoki, R. & Spiegel, Y., 1998. "Public Disclosure of Patent Applications, R&D, and Welfare," Papers 30-98, Tel Aviv.
    12. Jinyoung Kim, 2015. "Patent Portfolio Management of Sequential Inventions: Evidence from US Patent Renewal Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(2), pages 195-218, September.
    13. Marc Baudry & Béatrice Dumont, 2009. "A Bayesian Real Option Approach to Patents and Optimal Renewal Fees," Working Papers hal-00419330, HAL.

    More about this item



    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • 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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