OPTIMAL RULES FOR PATENT RACES

Kenneth Judd, Karl Schmedders and Sevin Yeltekin ()

International Economic Review, 2012, vol. 53, issue 1, 23-52

Abstract: There are two important rules to patent races: minimal accomplishment necessary to receive the patent and the allocation of the innovation benefits. We study the optimal combination of these rules. A planner, who cannot distinguish between competing firms in a multistage innovation race, chooses the patent rules by maximizing either consumer or social surplus. We show that efficiency cost of prizes is a key consideration. Races are undesirable only when efficiency costs are low, firms are similar, and social surplus is maximized. Otherwise, the optimal policy involves a race of nontrivial duration to spur innovation and filter out inferior innovators.

Date: 2012
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Citations: View citations in EconPapers (12)

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https://doi.org/10.1111/j.1468-2354.2011.00670.x

Related works:
Working Paper: Optimal Rules for Patent Races (2002)
Working Paper: Optimal Rules for Patent Races
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