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Patent Races, Product Standards, and International Competition

  • Richard A. Jensen
  • Marie Thursby

We examine anticipatory product standards intended to improve the strategic position of firms in an international patent race where firms do R&D to develop products that are close substitutes. The effects of a standard are shown to depend on the way the standard is specified, which firm develops which product, and on the order in which products are discovered. Simple standards are, in general, time inconsistent because of consumer losses that occur when products ruled out by the standard are discovered before the product set as the standard. A state contingent standard is shown to be time consistent when compulsory licensing by the foreign firm is introduced.

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File URL: http://www.nber.org/papers/w3870.pdf
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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3870.

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Date of creation: Oct 1991
Date of revision:
Publication status: published as International Economic Review, Volume 37, #1, pp. 21-49, February 1996
Handle: RePEc:nbr:nberwo:3870
Note: ITI IFM
Contact details of provider: Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Web page: http://www.nber.org
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  1. Kala Krishna, 1988. "High-Tech Trade Policy," NBER Chapters, in: Issues in US-EC Trade Relations, pages 285-314 National Bureau of Economic Research, Inc.
  2. Katz, Michael L & Shapiro, Carl, 1985. "Network Externalities, Competition, and Compatibility," American Economic Review, American Economic Association, vol. 75(3), pages 424-40, June.
  3. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-26, June.
  4. Fudenberg, Drew & Gilbert, Richard & Stiglitz, Joseph & Tirole, Jean, 1983. "Preemption, leapfrogging and competition in patent races," European Economic Review, Elsevier, vol. 22(1), pages 3-31, June.
  5. Shaked, Avner & Sutton, John, 1982. "Relaxing Price Competition through Product Differentiation," Review of Economic Studies, Wiley Blackwell, vol. 49(1), pages 3-13, January.
  6. Rachel McCulloch, 1988. "The Challenge to U.S. Leadership in High-Technology Industries (Can the United States Maintain Its Lead? Should It Try?)," NBER Working Papers 2513, National Bureau of Economic Research, Inc.
  7. Reinganum, Jennifer F., 1989. "The timing of innovation: Research, development, and diffusion," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 1, chapter 14, pages 849-908 Elsevier.
  8. Staiger, Robert W & Tabellini, Guido, 1987. "Discretionary Trade Policy and Excessive Protection," American Economic Review, American Economic Association, vol. 77(5), pages 823-37, December.
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