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Sequential Innovations and Intellectual Property Rights

Frederic Payot and Dezsoe Szalay ()
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Frederic Payot: Universitie of Lausanne

The Warwick Economics Research Paper Series (TWERPS) from University of Warwick, Department of Economics

Abstract: We analyze a two-stage patent race. In the first phase firms seek to develop a research tool, an innovation that has no commercial value but is necessary to enter the second phase of the race. The firm that completes the second phase of the race first obtains a patent on the final innnovation and enjoys its profits. We ask whether patent protection for the innovator of the research tool is beneficial from the ex ante point of view. We show that there is a range of values of the final innovation such that firms prefer to have no Intellectual Property Rights for research tools.

Keywords: Sequential Patent Race; Intellectual Property Rights; Knowledge Sharing (search for similar items in EconPapers)
JEL-codes: D86 L00 (search for similar items in EconPapers)
Pages: 18 pages
Date: 2008
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-pr~, nep-knm and nep-mic
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