Imitation, patent protection and welfare

Arijit Mukherjee and Enrico Pennings

No 2001/03, Keele Department of Economics Discussion Papers (1995-2001) from Department of Economics, Keele University

Abstract: Once a new technology has been invented, there is a credible threat of imitation when patent protection is strong and imitation cost is low. Within the area of credible imitation, the innovator has an incentive to postpone technology adoption when the cost of imitation is relatively high. The possibility of licensing, however, eliminates or at least reduces the incentive for delayed technology adoption and may increase or decrease social welfare. Further, this paper explains the possibility of a forward contract on licensing.

Keywords: Imitation; Innovation; Licensing; Patent Protection; Welfare (search for similar items in EconPapers)
JEL-codes: D45 L12 O33 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2001-06
Note: This is a revised and improved version of the working paper of the authors in ECIS under the same title. We would like to thank the participants of E.A.R.I.E. conference, 2000, and particularly, Vincenzo Denicolo for helpful comments and suggestions. Arijit Mukherjee also thanks Robin Bladen-Hovell, Paul de Hek, Roger Hartley and Tim Worrall for helpful discussions and acknowledges the financial support from the Netherlands Technology Foundation (STW).
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Published in Volume 56, Number 4, October 2004, pp. 715-733. [ doi:10.1093/oep/gpf062 ]

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Journal Article: Imitation, patent protection, and welfare (2004)
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