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On Competition and the Strategic Management of Intellectual Property in Oligopoly

Author

Listed:
  • Jos Jansen

    (Max Planck Institute for Research on Collective Goods)

Abstract

An innovative firm chooses strategically whether to patent its process innovation or rely on secrecy. By doing so, the firm manages its rival’s beliefs about the size of the innovation, and affects the incentives in the product market. Different measures of competitive pressure in the product market have different effects on the equilibrium patenting choices of an innovative firm with unknown costs and probabilistic patent validity. Increasing the number of firms (degree of product substitutability) gives a smaller (greater) patenting incentive. Switching from Bertrand to Cournot competition gives a smaller (greater) patenting incentive if patent protection is weak (strong).

Suggested Citation

  • Jos Jansen, 2009. "On Competition and the Strategic Management of Intellectual Property in Oligopoly," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2009_13, Max Planck Institute for Research on Collective Goods.
  • Handle: RePEc:mpg:wpaper:2009_13
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    File URL: http://www.coll.mpg.de/pdf_dat/2009_13online.pdf
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    Cited by:

    1. Traxler, Christian, 2012. "Majority voting and the welfare implications of tax avoidance," Journal of Public Economics, Elsevier, vol. 96(1), pages 1-9.

    More about this item

    Keywords

    Bertrand and Cournot competition; oligopoly; product differentiation; entry; asymmetric information; strategic disclosure; stochastic patent; trade secret; process innovation; imitation;
    All these keywords.

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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