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Racing with Uncertainty: A Patent Race Experiment

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  • Zizzo, D.J.

Abstract

This paper presents an experimental test of the multi-stage patent race model by Harris and Vickers (1987). Tied competitors invested more when nearer the end of the race, but this may have followed from a more general and unexplained pattern of a positive correlation between investment and progress in the race. The relationship between investment and gap between competitors was mostly not as predicted. Also, leaders did not invest more than (not heavily lagging) followers, and the race did not approach monopoly as the gap between competitors widened. Overall, the evidence brings only limited support to the theory.

Suggested Citation

  • Zizzo, D.J., 2001. "Racing with Uncertainty: A Patent Race Experiment," Economics Series Working Papers 9968, University of Oxford, Department of Economics.
  • Handle: RePEc:oxf:wpaper:9968
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    References listed on IDEAS

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    1. Cockburn, Iain. & Henderson, Iain., 1994. "Racing to invest? : the dynamics of competition in ethical drug discovery," Working papers 3710-94., Massachusetts Institute of Technology (MIT), Sloan School of Management.
    2. Cockburn, Iain & Henderson, Rebecca, 1994. "Racing to Invest? The Dynamics of Competition in Ethical Drug Discovery," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 3(3), pages 481-519, Fall.
    3. Dasgupta, Partha & Stiglitz, Joseph, 1980. "Industrial Structure and the Nature of Innovative Activity," Economic Journal, Royal Economic Society, vol. 90(358), pages 266-293, June.
    4. Christopher Harris & John Vickers, 1987. "Racing with Uncertainty," Review of Economic Studies, Oxford University Press, vol. 54(1), pages 1-21.
    5. 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.
    6. Furubotn, Eirik G., 2001. "The new institutional economics and the theory of the firm," Journal of Economic Behavior & Organization, Elsevier, vol. 45(2), pages 133-153, June.
    7. Christopher Harris & John Vickers, 1985. "Perfect Equilibrium in a Model of a Race," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 193-209.
    8. Isaac, R. Mark & Reynolds, Stanley S., 1992. "Schumpeterian competition in experimental markets," Journal of Economic Behavior & Organization, Elsevier, vol. 17(1), pages 59-100, January.
    9. Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, pages 514-526.
    10. R. Mark Isaac & Stanley S. Reynolds, 1988. "Appropriability and Market Structure in a Stochastic Invention Model," The Quarterly Journal of Economics, Oxford University Press, vol. 103(4), pages 647-671.
    11. Powell, Melanie & Ansic, David, 1997. "Gender differences in risk behaviour in financial decision-making: An experimental analysis," Journal of Economic Psychology, Elsevier, vol. 18(6), pages 605-628, November.
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    More about this item

    Keywords

    EXPERIMENTATION ; INVESTMENTS ; TESTS;

    JEL classification:

    • C91 - Mathematical and Quantitative Methods - - Design of Experiments - - - Laboratory, Individual Behavior
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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