We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes—patents, no-patents, ...and patent pools—and find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.
We present a model of sequential innovation in which innovators use several research inputs to invent new goods. We extend work by Shapiro (2001) and Lerner and Tirole (2004) by studying the effects ...of increases in the number of patented research inputs on innovation incentives and optimal patent policy. We consider not only the effects on the incentives to invent final goods, but also on the incentives to invent research inputs (ex-ante effect). We find increasing complexity has a negative effect on innovation activity in the final goods sector when research inputs are complements. Either limiting market power through weaker patents or reducing the lack of coordination through patent pools may solve this problem. We also find the optimal patent breadth and show it is increasing in the elasticity of substitution between the inputs used in research and decreasing (increasing) in the complexity of the RD process when research inputs are complements (substitutes).
We present a model of sequential innovation in which innovators use several research inputs to invent new goods. We extend work by Shapiro (2001) and Lerner and Tirole (2004) by studying the effects ...of increases in the number of patented research inputs on innovation incentives and optimal patent policy. We consider not only the effects on the incentives to invent final goods, but also on the incentives to invent research inputs (ex-ante effect). We find increasing complexity has a negative effect on innovation activity in the final goods sector when research inputs are complements. Either limiting market power through weaker patents or reducing the lack of coordination through patent pools may solve this problem. We also find the optimal patent breadth and show it is increasing in the elasticity of substitution between the inputs used in research and decreasing (increasing) in the complexity of the R&D process when research inputs are complements (substitutes).
We present a model of sequential innovation in which innovators use several research inputs to invent new goods. We extend work by Shapiro (2001) and Lerner and Tirole (2004) by studying the effects ...of increases in the number of patented research inputs on innovation incentives and optimal patent policy. We consider not only the effects on the incentives to invent final goods, but also on the incentives to invent research inputs (ex-ante effect). We find increasing complexity has a negative effect on innovation activity in the final goods sector when research inputs are complements. Either limiting market power through weaker patents or reducing the lack of coordination through patent pools may solve this problem. We also find the optimal patent breadth and show it is increasing in the elasticity of substitution between the inputs used in research and decreasing (increasing) in the complexity of the R&D process when research inputs are complements (substitutes).
Perhaps the main difference of opinions between Regibeau & Rockett and us is that we consider the patent thicket to be a real problem in many technology sectors, and one which leads to excessive ...strategic behavior and litigation. Lorenzo Coppi & Stefano Trento (Compass-Lexecon)
We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes -patents, ...no-patents, and patent pools- and find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.
We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes ...patents,no-patents,andpatentpoolsand find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.
We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes ...patents,no-patents,andpatentpoolsand find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.
We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes -patents, ...no-patents, and patent pools- and find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsidy when they innovate, and are taxed with subsequent innovations. This finding implies that optimal transfers work in the exact opposite way as traditional patents. Finally, we consider patents of finite duration and determine the optimal patent length.
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