Innovation, Fast Seconds, and Patent Policy

George Norman (), Lynne Pepall and Daniel Richards ()

No 745, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: We develop a model of innovation in which entrepreneurs develop a new (differentiated) product market that is subsequently exploited by a well-established firm that "stretches" its brand to enter a new market as "fast second". In this setting, there is a positive externality to the pioneering efforts of the intitial entrants that may well increase with the number of such entrants. We develop a model that exhibits this externality and use it to evaluate the design of patent policy--specifically patent breadth--with a view to encouraging the optimal amount of initial entry.

Keywords: fast second; product differentiation; contestability (search for similar items in EconPapers)
JEL-codes: L5 O25 (search for similar items in EconPapers)
Date: 2009
New Economics Papers: this item is included in nep-com, nep-ent, nep-ino, nep-ipr, nep-pr~ and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:tuf:tuftec:0745

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