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Towards a Theory of Socially Valuable Imitation with Implications for Technology Policy

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  • Vesa Kanniainen
  • Rune Stenbacka

Abstract

We present a novel theory of socially optimal initation in a model exhibiting strategic interaction between innovating and imitating firms. We demonstrate how the socially optimal innovation and imitation intensities can be implemented with subsidy policies, but not with patent policy, if the necessary public funds can be raised without causing deadweight losses. We show the impact of patents on innovation and imitation in a novel way. We characterize the relationship between patent and subsidy policies at the optimal mix of technology policies and indicate how the optimal patent policy is related to the social costs of subsidies and substitutability between policy instruments.

Suggested Citation

  • Vesa Kanniainen & Rune Stenbacka, "undated". "Towards a Theory of Socially Valuable Imitation with Implications for Technology Policy," EPRU Working Paper Series 95-03, Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics.
  • Handle: RePEc:kud:epruwp:95-03
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    References listed on IDEAS

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    Cited by:

    1. Stenbacka, Rune & Tombak, Mihkel M., 1998. "Technology policy and the organization of R&D," Journal of Economic Behavior & Organization, Elsevier, vol. 36(4), pages 503-520, September.

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