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Sequential innovations with unobservable follow-on investments

Stefano Comino (), Fabio Manenti () and Antonio Nicol• ()
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Antonio Nicol•: Universit… di Padova,

Authors registered in the RePEc Author Service: Antonio Nicolo' ()

No 41, "Marco Fanno" Working Papers from Dipartimento di Scienze Economiche "Marco Fanno"

Abstract: ?We consider a cumulative innovation process in which a follow-on innovator invests in R&D activities that influence both the expected commercial value as well as the novelty of its innovation. When the second innovator investments are not servable,licensing of the first innovation never occurs efficiently, and, at the equilibrium, the follow-on innovator either underinvests or overinvests. We show that a large patent breadth may be harmful for the first innovator too, and therefore Pareto-dominated;as long as the undervinvestment problem becomes more pronounced, the value generated by the follow-on innovator reduces, and so do the licensing revenues of the first inventor.

Keywords: ??sequential innovation; patents; licensing; intellectual property (search for similar items in EconPapers)
JEL-codes: K3 L5 O3 (search for similar items in EconPapers)
Pages: 22 pages
Date: 2007-05
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~, nep-law, nep-mic and nep-tid
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