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Waiting to Imitate: On the Dynamic Pricing of Knowledge

Author

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  • Emeric Henry

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

  • Carlos J. Ponce

    (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique)

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 dramatically affects the need for patent protection. Indeed, 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 by the imitators; (iii) The proffits of the inventor typically increase with the number of potential imitators.

Suggested Citation

  • Emeric Henry & Carlos J. Ponce, 2011. "Waiting to Imitate: On the Dynamic Pricing of Knowledge," SciencePo Working papers Main hal-00972950, HAL.
    • Handle: RePEc:hal:spmain:hal-00972950
    Note: View the original document on HAL open archive server: https://sciencespo.hal.science/hal-00972950
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    More about this item

    Keywords

    Patents; contracting; knowledge trading; delay; war of attrition;
    All these keywords.

    JEL classification:

    • 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
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games

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