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Innovation, Fast Seconds, and Patent Policy

Author

Listed:
  • George Norman
  • Lynn Pepall
  • Dan Richards

Abstract

We develop a model of innovation in which entrepreneurs develop a new (differentiated) product market that is subsequently exploited by a well-established firm that "stretches" its brand to enter a new market as "fast second". In this setting, there is a positive externality to the pioneering efforts of the intitial entrants that may well increase with the number of such entrants. We develop a model that exhibits this externality and use it to evaluate the design of patent policy--specifically patent breadth--with a view to encouraging the optimal amount of initial entry.

Suggested Citation

  • George Norman & Lynn Pepall & Dan Richards, 2009. "Innovation, Fast Seconds, and Patent Policy," Discussion Papers Series, Department of Economics, Tufts University 0745, Department of Economics, Tufts University.
  • Handle: RePEc:tuf:tuftec:0745
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    File URL: http://ase.tufts.edu/econ/research/documents/2009/normanInnovation.pdf
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    Cited by:

    1. Aoki, Reiko & Hillas, John & Kao, Tina, 2014. "Product Customization in the Spokes Model," CEI Working Paper Series 2014-8, Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University.

    More about this item

    Keywords

    fast second; product differentiation; contestability;
    All these keywords.

    JEL classification:

    • L5 - Industrial Organization - - Regulation and Industrial Policy
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy

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