Demand structure and the incentive to innovate

Ming-Hung Weng

Mathematical Social Sciences, 2012, vol. 63, issue 3, 248-251

Abstract: Recently, it has been shown that an outside innovator of a significant innovation is best off selling his patent rights to an incumbent firm who can then license the innovation to some other firms. Using this strategy of the outside innovator we show that as the number of firms in the industry increases, the incentive to innovate increases if the demand is strictly convex, decreases if the demand is strictly concave and does not change if the demand is linear.

Date: 2012
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Persistent link: https://EconPapers.repec.org/RePEc:eee:matsoc:v:63:y:2012:i:3:p:248-251

DOI: 10.1016/j.mathsocsci.2012.03.002

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