On Competition and the Strategic Management of Intellectual Property in Oligopoly

On Competition and the Strategic Management of Intellectual Property in Oligopoly An innovative firm with private information about its indivisible process innovation chooses strategically whether to apply for a patent with probabilistic validity or rely on secrecy. By doing so, the firm manages its rivals’ beliefs about the size of the innovation, and affects the incentives in the product market. A Cournot competitor tends to patent big innovations, and keep small innovations secret, while a Bertrand competitor adopts the reverse strategy. Increasing the number of firms gives a greater (smaller) patenting incentive for Cournot (Bertrand) competitors. Increasing the degree of product substitutability increases the incentives to patent the innovation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Economics & Management Strategy Wiley

On Competition and the Strategic Management of Intellectual Property in Oligopoly

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Publisher
Wiley
Copyright
© 2011 Wiley Periodicals, Inc.
ISSN
1058-6407
eISSN
1530-9134
D.O.I.
10.1111/j.1530-9134.2011.00316.x
Publisher site
See Article on Publisher Site

Abstract

An innovative firm with private information about its indivisible process innovation chooses strategically whether to apply for a patent with probabilistic validity or rely on secrecy. By doing so, the firm manages its rivals’ beliefs about the size of the innovation, and affects the incentives in the product market. A Cournot competitor tends to patent big innovations, and keep small innovations secret, while a Bertrand competitor adopts the reverse strategy. Increasing the number of firms gives a greater (smaller) patenting incentive for Cournot (Bertrand) competitors. Increasing the degree of product substitutability increases the incentives to patent the innovation.

Journal

Journal of Economics & Management StrategyWiley

Published: Dec 1, 2011

References

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