Sequential Innovation, Patents, And Imitation

Name

Sequential Innovation, Patents, And Imitation

Cite

MIT Working Paper

Year

2000

Bluebook cite

James Bessen And Eric Maskin, Sequential Innovation, Patents, And Imitation, MIT Working Paper (Jan. 2000)

Author

James Bessen And Eric Maskin

URL

http://www.researchoninnovation.org/patent.pdf

Item Type

article

Summary

How could such industries as software, semiconductors, and computers
have been so innovative despite historically weak patent protection? We argue that
if innovation is both sequential and complementary—as it certainly has been in
those industries—competition can increase firms’ future profits thus offsetting
short-term dissipation of rents. A simple model also shows that in such a dynamic
industry, patent protection may reduce overall innovation and social welfare. The
natural experiment that occurred when patent protection was extended to software
in the 1980's provides a test of this model. Standard arguments would predict that
R&D intensity and productivity should have increased among patenting firms.
Consistent with our model, however, these increases did not occur. Other evidence
supporting our model includes a distinctive pattern of cross-licensing in these
industries and a positive relationship between rates of innovation and firm entry.

Excerpts and Summaries

Created

Thursday 13 of August, 2009 15:32:02 GMT
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Thursday 13 of August, 2009 15:32:02 GMT
by Unknown