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The Protection of Innovations

Author

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  • Gamal Atallah

    (Department of Economics, University of Ottawa)

Abstract

This paper proposes a model where firms invest in secrecy to limit technological spillovers accruing to their competitors, in addition to investing in cost-reducing R&D. The main result of the paper is that increases in spillovers increase secrecy, suggesting that legal and strategic protection are substitutes. Higher product differentiation is associated with higher levels of innovation and lower levels of secrecy. An increase in the size of the market, a reduction in the cost of secrecy,or a reduction in the cost of R&D, all lead to an increase in secrecy. As for the effect of spillovers on effective cost reduction, it is positive when products are sufficiently differentiated, and has an inverted-U shape with low product differentiation. Compared to price competition, quantity competition yield higher levels of R&D, secrecy and effective cost reduction.

Suggested Citation

  • Gamal Atallah, 2004. "The Protection of Innovations," Working Papers 0402E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:0402e
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Gamal Atallah, 2005. "R&D cooperation with asymmetric spillovers," Canadian Journal of Economics, Canadian Economics Association, vol. 38(3), pages 919-936, August.
    2. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2023. "The disclosure decision game: Subsidies and incentives for R&D activity," Mathematical Social Sciences, Elsevier, vol. 125(C), pages 11-26.
    3. Chrysovalantou Milliou, 2009. "Endogenous protection of R&D investments," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 184-205, February.
    4. Buccella Domenico & Fanti Luciano & Gori Luca, 2023. "The R&D Investment Decision Game with Product Differentiation," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 23(2), pages 601-637, June.
    5. Ramona Miron & Simona Gabor, 2012. "Intellectual Property Within The Emerging Renewable Energy Market: A Case Study Of The Eu," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 4(3), pages 364-384, September.
    6. Buccella, Domenico & Fanti, Luciano & Gori, Luca, 2021. "A contribution to the theory of R&D investments," GLO Discussion Paper Series 940, Global Labor Organization (GLO).
    7. repec:jes:wpaper:y:2012:v:4:p:364-384 is not listed on IDEAS
    8. Senyuta, Olena & Žigić, Krešimir, 2016. "Managing spillovers: An endogenous sunk cost approach," Information Economics and Policy, Elsevier, vol. 35(C), pages 45-64.
    9. Milliou, Chrysovalantou, 2006. "Endogenous protection of R and D investments," UC3M Working papers. Economics we066325, Universidad Carlos III de Madrid. Departamento de Economía.

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    More about this item

    Keywords

    Secrecy; Protection; Innovation; Technology; Spillovers; R&D; Appropriability;
    All these keywords.

    JEL classification:

    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • 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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