Innovation, imitation and policy inaction

Roy Cerqueti, Anna Grazia Quaranta () and Marco Ventura

Technological Forecasting and Social Change, 2016, vol. 111, issue C, 22-30

Abstract: The paper deals with the controversial issue of intellectual property rights. We deal with an optimization problem to model the optimal government's behavior in presence of dynamic uncertainty and intervention costs. More specifically, we search for the optimal strategies to be implemented by a policy maker to optimally balance the number of innovators and imitators. The problem is first tackled from a purely theoretical perspective and then by implementing extensive numerical simulations on the basis of empirical data. By the theoretical perspective, we obtain a rigorous proof that optimal strategies depend on the initial value of the number of imitators and not on the initial ratio between innovators and imitators, whereas the simulations provide us with intuitive insights from an economic point of view, along with a validation of the theoretical results. The results support the evidence that governments choose the possible widest bandwidth and minimize the size of interventions so as to curb intervention costs.

Keywords: Imitation; Innovation; Intellectual property; Inaction region; Optimization model; Numerical simulation (search for similar items in EconPapers)
JEL-codes: C61 C63 O31 O34 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:tefoso:v:111:y:2016:i:c:p:22-30

DOI: 10.1016/j.techfore.2016.06.001

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