On the diffusion of competing innovations

Bruno Badia (), Yair Tauman and Biligbaatar Tumendemberel

Mathematical Social Sciences, 2020, vol. 108, issue C, 8-13

Abstract: We consider a model with two patentees of perfect substitute innovations that enable the manufacture of a new product and a competitive pool of potential licensees. Timing of licensing is endogenous. We show that under certain conditions the equilibrium probability that patentees delay licensing in each period is positive and increasing in the common discount factor adopted by innovators and firms. Consequently, more competition in the market for the innovation may induce lower innovation diffusion and lower welfare in the downstream market. We also show that this conclusion does not hold if at least one patentee is an incumbent.

Keywords: Patent licensing; Competing innovators; Perfect substitute innovations; Innovation diffusion; Licensing delay (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:108:y:2020:i:c:p:8-13

DOI: 10.1016/j.mathsocsci.2020.08.001

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