Patent Races Optimal with Respect to Entry

John M. Hartwick

Working Papers from Queen's University, Department of Economics

Abstract: We introduce a patent (prize) which induces entry at a level which satisfies the basic condition of optimality with respect to the "size" of the race (a second best patent). We observe in an example that the resulting equilibrium is very close to the first best optimal. The approach of the second best patent explains why discoverers should only receive a fraction of the social value of their discovery.

Date: 1988
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Persistent link: http://EconPapers.repec.org/RePEc:qed:wpaper:711

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