Patent policy, patent pools, and the accumulation of claims in sequential innovation

Gastón Llanes, Stefano Trento

    Research output: Contribution to journalArticleResearchpeer-review

    16 Citations (Scopus)

    Abstract

    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. © 2010 Springer-Verlag.
    Original languageEnglish
    Pages (from-to)703-725
    JournalEconomic Theory
    Volume50
    Issue number3
    DOIs
    Publication statusPublished - 1 Aug 2012

    Keywords

    • Anticommons
    • Complementary monopoly
    • Double marginalization
    • Patent policy
    • Patent pools
    • Sequential innovation

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