Strategic Concealment in Innovation Races

Yonggyun Kim () and Francisco Poggi ()

CRC TR 224 Discussion Paper Series from University of Bonn and University of Mannheim, Germany

Abstract: We introduce a dynamic innovation game where participants race to develop a product using alternative technologies. Race participants dynamically allocate resources across (i) developing the product with the currently available technology and (ii) obtaining a faster technology for posterior development. When firm’s available technologies are publicly observable, there is a unique MPE in which firms react to a rivals’ technological discovery by increasing the share of resources allocated to development. However, without frictions, the firms file patents and license technologies to their rivals. When firm’s available technologies are private information, firms conceal their discoveries by forgoing patenting, even when patent holders retain all bargaining power in licensing negotiations.

Keywords: Direction of Innovation; Patent; License; Trade Secret (search for similar items in EconPapers)
JEL-codes: C73 D21 O30 (search for similar items in EconPapers)
Pages: 77
Date: 2025-02
New Economics Papers: this item is included in nep-com, nep-gth, nep-ipr, nep-mic and nep-tid
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