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Sequential innovations with unobservable follow-on investments

Author

Listed:
  • Stefano Comino

    (Universit… di Trento,)

  • ?Fabio Manenti

    (Universit… di Padova,)

  • ?Antonio Nicol•

    (Universit… di Padova,)

Abstract

?We consider a cumulative innovation process in which a follow-on innovator invests in R&D activities that influence both the expected commercial value as well as the novelty of its innovation. When the second innovator investments are not servable,licensing of the first innovation never occurs efficiently, and, at the equilibrium, the follow-on innovator either underinvests or overinvests. We show that a large patent breadth may be harmful for the first innovator too, and therefore Pareto-dominated;as long as the undervinvestment problem becomes more pronounced, the value generated by the follow-on innovator reduces, and so do the licensing revenues of the first inventor.

Suggested Citation

  • Stefano Comino & ?Fabio Manenti & ?Antonio Nicol•, 2007. "Sequential innovations with unobservable follow-on investments," "Marco Fanno" Working Papers 0041, Dipartimento di Scienze Economiche "Marco Fanno".
    • Handle: RePEc:pad:wpaper:0041
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    References listed on IDEAS

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    Cited by:

    1. Rockett, Katharine, 2010. "Property Rights and Invention," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 315-380, Elsevier.

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    More about this item

    Keywords

    ??sequential innovation; patents; licensing; intellectual property;
    All these keywords.

    JEL classification:

    • K3 - Law and Economics - - Other Substantive Areas of Law
    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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