Chapter 1 Rent Dissipation in R&D Races

Ulrich Doraszelski

A chapter in The Economics of Innovation, 2008, pp 3-13 from Emerald Group Publishing Limited

Abstract: The literature on R&D races suggests that noncolluding firms invest excessively in R&D. We show that this result depends critically on the winner-take-all assumption. Although rents continue to be dissipated once the winner-take-all assumption is relaxed because firms in general fail to provide the optimal R&D effort, the mechanisms behind this rent dissipation change with the degree of patent protection. We then illustrate how the patent system can be used to elicit the optimal R&D effort.

Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ceazzz:s0573-8555(08)00201-0

DOI: 10.1016/S0573-8555(08)00201-0

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