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Are Patents Strategic Barriers to Entry?

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  • Langinier, Corinne

Abstract

Patent protection restricts entry rather than preventing it. In case of a process innovation, it forces a potential entrant to sufficiently differentiate his production technology. We investigate whether a patentholder threatened by entry can strategically renew her patent. For low demand, the patent renewal is sufficient to deter entry, whereas a high demand attracts competitor, even if there is a patent. On the other hand, the renewal decision can signal information to an uninformed entrant whenever the patentholder is informed. This may act as a barrier to entry. Thus, a patent is renewed more frequently in presence of asymmetric information.

Suggested Citation

  • Langinier, Corinne, 2004. "Are Patents Strategic Barriers to Entry?," Staff General Research Papers Archive 11482, Iowa State University, Department of Economics.
    • Handle: RePEc:isu:genres:11482
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    References listed on IDEAS

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    Cited by:

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    2. Jürgen Mihm & Fabian J. Sting & Tan Wang, 2015. "On the Effectiveness of Patenting Strategies in Innovation Races," Management Science, INFORMS, vol. 61(11), pages 2662-2684, November.
    3. Marco Guerrazzi, 2020. "Efficiency-Wage Competition: What Happens as the Number of Players Increases?," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 6(1), pages 13-35, March.
    4. Castelnovo, Paolo & Clò, Stefano & Florio, Massimo, 2023. "A quasi-experimental design to assess the innovative impact of public procurement: An application to the Italian space industry," Technovation, Elsevier, vol. 121(C).
    5. Keisuke Hattori & Keisaku Higashida, 2023. "Who should be regulated: Genuine producers or third parties?," Journal of Economics, Springer, vol. 138(3), pages 249-286, April.
    6. Jinyoung Kim, 2015. "Patent Portfolio Management of Sequential Inventions: Evidence from US Patent Renewal Data," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 47(2), pages 195-218, September.
    7. Jinyoung Kim, 2010. "Patent Portfolio Management of Sequential Innovations," Discussion Paper Series 1005, Institute of Economic Research, Korea University.
    8. Jinyoung Kim, 2015. "Patent Portfolio Management of Sequential Innovations: Theory and Empirics," Discussion Paper Series 1504, Institute of Economic Research, Korea University.
    9. Paolo Castelnuovo & Stefano Clo & Massimo Florio, 2021. "Space policy drives innovation through technological procurement: evidence from Italy," Working Papers - Economics wp2021_08.rdf, Universita' degli Studi di Firenze, Dipartimento di Scienze per l'Economia e l'Impresa.
    10. Adam Karbowski, 2021. "Unproductive entrepreneurship and patents," Bank i Kredyt, Narodowy Bank Polski, vol. 52(5), pages 473-494.
    11. Sreedhar, I. & Nahar, Tanisha & Venugopal, A. & Srinivas, B., 2017. "Carbon capture by absorption – Path covered and ahead," Renewable and Sustainable Energy Reviews, Elsevier, vol. 76(C), pages 1080-1107.
    12. Kurt R. Brekke & Odd Rune Straume, 2008. "Pharmaceutical Patents: Incentives for R&D or Marketing?," CESifo Working Paper Series 2433, CESifo.

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