Sequential Product Innovation, Competition and Patent Policy

George Norman, Lynne Pepall and Dan Richards

No 786, Discussion Papers Series, Department of Economics, Tufts University from Department of Economics, Tufts University

Abstract: This paper examines the role of patent policy in a spatial model of sequential innovation. Initial entrepreneurs develop a new product market and anticipate that subsequent innovation may lead to a product line that consumers value more highly. The likelihood of sequential innovation increases with the number of initial early entrants in the market. Patent protection that encourages early entry can therefore raise the probability of both initial and subsequent innovation. We determine the optimal patent breadth as a function of key industry characteristics of both consumer taste and the new technology.

Keywords: sequential innovation; patent policy; entry (search for similar items in EconPapers)
JEL-codes: L5 O25 (search for similar items in EconPapers)
Date: 2014
New Economics Papers: this item is included in nep-com, nep-cse, nep-ent, nep-ind, nep-ino, nep-ipr, nep-pr~, nep-law, nep-mic and nep-sbm
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Persistent link: https://EconPapers.repec.org/RePEc:tuf:tuftec:0786

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