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Patent Scope and Technology Choice

  • Färnstrand Damsgaard, Erika

    ()

    (Research Institute of Industrial Economics (IFN))

This paper analyzes the effect of an increase in patent scope on R&D and innovation. It presents a model where patent scope affects an entrant firm's technology choice and thereby creates a trade-off between R&D investments and wasteful duplication of R&D. The model predicts that an increase in patent scope can increase the probability of innovation if the incumbent’s profit increase from innovation is large and the patented technology has a small advantage over the alternative technology. However, when the model is extended to Stackelberg competition or licensing, the benefit of a broad patent scope to a large extent disappears.

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Paper provided by Research Institute of Industrial Economics in its series Working Paper Series with number 792.

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Length: 39 pages
Date of creation: 03 Mar 2009
Date of revision:
Handle: RePEc:hhs:iuiwop:0792
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  1. James Bessen & Eric Maskin, 2006. "Sequential Innovation, Patents, and Imitation," Economics Working Papers 0025, Institute for Advanced Study, School of Social Science.
  2. Blundell, Richard & Griffith, Rachel & van Reenen, John, 1999. "Market Share, Market Value and Innovation in a Panel of British Manufacturing Firms," Review of Economic Studies, Wiley Blackwell, vol. 66(3), pages 529-54, July.
  3. Luis Cabral & Ben Polak, 2004. "Does Microsoft Stifle Innovation? Dominant Firms, Imitation, and R & D Incentives," Working Papers 04-16, New York University, Leonard N. Stern School of Business, Department of Economics.
  4. Federico Etro, 2004. "Innovation by leaders," Economic Journal, Royal Economic Society, vol. 114(495), pages 281-303, 04.
  5. Joseph Zeira, 2011. "Innovations, patent races and endogenous growth," Journal of Economic Growth, Springer, vol. 16(2), pages 135-156, June.
  6. Gilbert, R. & Shapiro, C., 1988. "Optimal Patent Length And Breadth," Papers 28, Princeton, Woodrow Wilson School - Discussion Paper.
  7. Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-48, September.
  8. Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
  9. Pankaj Tandon, 1983. "Rivalry and the Excessive Allocation of Resources to Research," Bell Journal of Economics, The RAND Corporation, vol. 14(1), pages 152-165, Spring.
  10. Lerner, Josh, 1995. "Patenting in the Shadow of Competitors," Journal of Law and Economics, University of Chicago Press, vol. 38(2), pages 463-95, October.
  11. Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers.
  12. Kitch, Edmund W, 1977. "The Nature and Function of the Patent System," Journal of Law and Economics, University of Chicago Press, vol. 20(2), pages 265-90, October.
  13. Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring.
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