The case for permissive patents

Manna, Manfredi La; MacLeod, R.C.; Meza, David de

doi:10.1016/0014-2921(89)90056-1

Cited by 29 publications

(30 citation statements)

References 5 publications

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“…In other words, the payo¤ di¤erence between the …rst and second innovator becomes smaller, which weakens the incentive to invest in R&D in the …rst stage. 18 17 Consistent with the previous literature on patent races, the overall R&D investment is excessive compared to the cooperative equilibrium. The economic intuition underlying this result is that each …rm ignores its impact on its rivals'payo¤s, and, consequently, there is too much duplication of e¤ort in the noncooperative equilibrium.…”

Section: Endogenous Innovation Arrival Ratesupporting

confidence: 74%

“…17 How does the incentive to innovate respond to stronger patent protection? In general, stronger patent protection provides greater rewards to innovators and thus increases the incentive to innovate.…”

Section: Endogenous Innovation Arrival Ratementioning

confidence: 99%

“…This paper is also related to the literature on multiple patents and the defense of inde-pendent inventions (La Manna, MacLeod and de Meza, 1989;Shapiro, 2006;Franzoni, 2004a, 2010). In this literature, the key issue is the optimal allocation of prizes or the mechanisms by which these prizes are awarded in an innovation race.…”

Section: Introductionmentioning

confidence: 99%

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Patenting in the shadow of independent discoveries by rivals

Zhang

2012

International Journal of Industrial Organization

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Abstract. This paper studies the decision of whether to apply for a patent in a dynamic model in which …rms innovate stochastically and independently. In the model, a …rm can choose between patenting and maintaining secrecy to protect a successful innovation. I consider a legal environment characterized by imperfect patent protection and no prior user rights. Thus, patenting grants probabilistic protection, and secrecy is e¤ectively maintained until rivals innovate. I show that (1) …rms that innovate early are more inclined to choose secrecy, whereas …rms that innovate late have a stronger tendency to patent; (2) the incentives to patent increase with the innovation arrival rate; and (3) an increase in the number of …rms may cause patenting to occur earlier or later, depending on the strength of patent protection. The socially optimal level of patent protection, which balances the trade-o¤ between the provision of patenting incentives and the avoidance of deadweight loss caused by a monopoly, is lower with a higher innovation arrival rate or a larger number of …rms.

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Section: Endogenous Innovation Arrival Ratesupporting

confidence: 74%

Section: Endogenous Innovation Arrival Ratementioning

confidence: 99%

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Patenting in the shadow of independent discoveries by rivals

Zhang

2012

International Journal of Industrial Organization

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“…In La Manna, Macleod, and de Meza [24] rms spend a xed initial amount in R&D that determines a probability of inventing 5 This extension also has implications for a patent system that allows rms to self-select protection levels, as proposed by Encaoua et al [9], so as to endogenously raise the investment cost of follower rms.…”

Section: Quoted In Fudenberg Andmentioning

confidence: 99%

Winner-Take-All, Take-Most or Pay-Some? Optimal Protection of Innovation in a Dynamic Model of Product Development

2017

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In a model of investment in product development in duopoly we study the implications of dierent costs of innovating and imitating for rm strategies and optimal IP protection, relating these to the dynamic characteristics of a stochastic demand. A critical relative cost is identied that determines whether strategic competition takes the form of attrition or preemption, with industry value being maximized when rms neither stall nor hasten entry. Provided that demand growth and volatility are suciently low, as typically arises in mature industries, it is socially desirable to provide innovators with complete protection (winner-take-all), implying a preemption race. But when demand is rapidly expanding and highly unpredictable a social optimum can involve a low level of protection, implying attrition, albeit with a positive lower bound for the optimal level of imitation cost (winner-pays-some). Industry prots increase if rms can commit not to seek stronger IP protection once they have innovated, providing a rationale for open standards. While buyouts have ambiguous welfare eects, simple licensing schemes are welfare improving.JEL classication: G31, L13, O33

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“…Actually, what we are considering is a situation such that, from the point of view not necessarily of the technological discoveries themselves, but of the economically relevant accruing of extraordinary profits through IPRs protection, it is as if simultaneous innovations occurred. La Manna, Macleod and Meza (1989) argue that, as matter of fact, something like that is already in course in many countries, including the US Patent and Trademark Office, which are adopting the "secrecy period" procedure, by which from the time of the first application for a given patent until its judgement/publication more applicants are allowed to enter the process, with the provision that during this period technical details of the submitted applications are kept secret. This system gives origin not necessarily to monopolies only, but possibly to oligopolies too and, in our framework, to Bertrand competition driving profits to zero.…”

Section: Comparative Statics On Growthmentioning

confidence: 99%