{"title":"DO STRONGER PATENTS LEAD TO FASTER INNOVATION? THE EFFECT OF CLUSTERED SEARCH","authors":"Kaustav Das, Nicolas Klein","doi":"10.1111/iere.12688","DOIUrl":null,"url":null,"abstract":"<p>We analyze a patent race between two firms choosing between an <i>established</i> and an <i>innovative</i> method. The unique Markov-perfect equilibrium coincides with the cartel solution if and only if firms have the same ability of leveraging a good innovative method or there is no patent protection. Otherwise, equilibrium efforts are clustered too much in the innovative method, as compared to the cartel benchmark. The expected time to a breakthrough is minimized at an interior patent strength. Thus, a decrease in R&D productivity can go hand-in-hand with a concentration of research efforts in riskier areas and stronger patent protections.</p>","PeriodicalId":48302,"journal":{"name":"International Economic Review","volume":"65 2","pages":"915-954"},"PeriodicalIF":1.5000,"publicationDate":"2024-02-21","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":"0","resultStr":null,"platform":"Semanticscholar","paperid":null,"PeriodicalName":"International Economic Review","FirstCategoryId":"96","ListUrlMain":"https://onlinelibrary.wiley.com/doi/10.1111/iere.12688","RegionNum":3,"RegionCategory":"经济学","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":null,"EPubDate":"","PubModel":"","JCR":"Q2","JCRName":"ECONOMICS","Score":null,"Total":0}
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Abstract
We analyze a patent race between two firms choosing between an established and an innovative method. The unique Markov-perfect equilibrium coincides with the cartel solution if and only if firms have the same ability of leveraging a good innovative method or there is no patent protection. Otherwise, equilibrium efforts are clustered too much in the innovative method, as compared to the cartel benchmark. The expected time to a breakthrough is minimized at an interior patent strength. Thus, a decrease in R&D productivity can go hand-in-hand with a concentration of research efforts in riskier areas and stronger patent protections.
期刊介绍：
The International Economic Review was established in 1960 to provide a forum for modern quantitative economics. From its inception, the journal has tried to stimulate economic research around the world by publishing cutting edge papers in many areas of economics, including econometrics, economic theory, macro, and applied economics.
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