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Patenting Or Secret? The Interaction Between Leading Firms And Following Firms Based On Evolutionary Game Theory And Multi-Agent Simulation

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  • XIAOYANG ZHAO

    (College of Management and Economics, Tianjin University, 92 Weijin Road, Tianjin, China)

Abstract

Firms who want to appropriate innovation often need to make decision facing the trade-off between patenting and secret. This paper explores how leading firms make trade-off between patenting and secret through the view of the interaction between leading firms and following firms who have the option of imitation or substitution, based on the evolutionary game theory. Then, a simulation model is built combining the evolutionary game model and agent-based modelling method, which allows us to implement bounded rationality and interactivities. The simulation is run with different gain parameters and the results are checked by cross-validation. It is found that leading firms are more likely to adopt patenting strategy with well developed patent protection regime. While depending on variations on patent protection effectiveness, technological characteristics, and leading firms’ investment in patent portfolio development, following firms may choose imitation strategy or substitution strategy. Considering bounded rationality, firms could choose sub-optional strategies and leads to scenarios other than evolutionary equilibrium solutions, which provide deeper insights of strategic choices of leading firms and following firms. This paper makes contributions to theory by using the perspective of multi-agent view and integrating bounded rationality in the simulation. Finally, this paper draws conclusion and puts forward some suggestions.

Suggested Citation

  • Xiaoyang Zhao, 2019. "Patenting Or Secret? The Interaction Between Leading Firms And Following Firms Based On Evolutionary Game Theory And Multi-Agent Simulation," International Journal of Innovation Management (ijim), World Scientific Publishing Co. Pte. Ltd., vol. 23(07), pages 1-22, October.
    • Handle: RePEc:wsi:ijimxx:v:23:y:2019:i:07:n:s1363919619500683
    DOI: 10.1142/S1363919619500683
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    References listed on IDEAS

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