On Competition and the Strategic Management of Intellectual Property in Oligopoly

Jansen, Jos (October 2010): On Competition and the Strategic Management of Intellectual Property in Oligopoly. SFB/TR 15 Discussion Paper No. 339

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.

• Item Type: Paper (Discussion Paper)
• Keywords: Bertrand and Cournot competition, oligopoly, productdifferentiation
• Collections: Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems; Special Research Fields > Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems > B3 - Unternehmenskontrolle, Unternehmensfinanzierung und Effizienz
• Subjects: 300 Social sciences > 330 Economics
• JEL Classification: D82, L13, O31, O32
• Language: English