Selection Biases in Complementary R&D Projects

Jay Choi and Heiko Gerlach

No 3425, CESifo Working Paper Series from CESifo

Abstract: This paper analyzes selection biases in the project choice of complementary technologies that are used in combination to produce a final product. In the presence of complementary technologies, patents allow innovating firms to hold up rivals who succeed in developing other system components. This hold-up potential induces firms to preemptively claim stakes on component property rights and excessively cluster their R&D efforts on a relatively easier technology. This selection bias is persistent and robust to several model extensions. Implications for the optimal design of intellectual property rights are discussed. We also analyze selection biases that arise when firms differ in research capabilities.

Keywords: R&D project choice; preemptive duplication; complementary innovations (search for similar items in EconPapers)
JEL-codes: D43 L13 O30 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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Journal Article: Selection Biases in Complementary R&D Projects (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_3425

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