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Strategic Concealment in Innovation Races

Author

Listed:
  • Yonggyun Kim
  • Francisco Poggi

Abstract

We introduce a dynamic innovation game where participants race to develop a product using alternative technologies. Race participants dynamically allocate resources across (i) developing the product with the currently available technology and (ii) obtaining a faster technology for posterior development. When firm’s available technologies are publicly observable, there is a unique MPE in which firms react to a rivals’ technological discovery by increasing the share of resources allocated to development. However, without frictions, the firms file patents and license technologies to their rivals. When firm’s available technologies are private information, firms conceal their discoveries by forgoing patenting, even when patent holders retain all bargaining power in licensing negotiations.

Suggested Citation

  • Yonggyun Kim & Francisco Poggi, 2025. "Strategic Concealment in Innovation Races," CRC TR 224 Discussion Paper Series crctr224_2025_648, University of Bonn and University of Mannheim, Germany.
    • Handle: RePEc:bon:boncrc:crctr224_2025_648
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    File URL: https://www.crctr224.de/research/discussion-papers/archive/dp648
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    More about this item

    Keywords

    Direction of Innovation; Patent; License; Trade Secret;
    All these keywords.

    JEL classification:

    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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