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The Impact of Patents and R&D Cooperation on R&D Investments in a Differentiated Goods Industry

Karbowski Adam () and Jacek Prokop ()
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Karbowski Adam: PhD in Economics, Assistant Professor, Department of Business Economics, Collegium of World Economy, SGH Warsaw School of Economics

South East European Journal of Economics and Business, 2020, vol. 15, issue 1, 122-133

Abstract: In this paper, we consider the impact of patents and R&D cooperation on R&D investments in the oligopolistic industry with differentiated products. Four types of firms’ conduct are investigated: R&D competition without patents, R&D competition with patent protection, R&D cooperation, and the full industry cooperation. The obtained results suggest that patents do not necessarily promote R&D investments due to the existence of so called tournament effects. R&D cooperation stimulates R&D investments, but R&D cooperation provides sufficient incentives to create a full industry cartel. Such a cartel works to the detriment of consumers. Our analysis led us to the conclusion that for a relatively low level of R&D spillovers, the policy-makers should promote R&D competition without patent protection among oligopolistic firms. For a relatively high level of R&D spillovers, R&D cooperation enhances innovation, but the regulator should monitor the market for probable collusion.

Keywords: research and development; investments; patents; cooperation; differentiated goods (search for similar items in EconPapers)
JEL-codes: O3 (search for similar items in EconPapers)
Date: 2020
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