Innovation Beyond Patents: Technological Complexity as a Protection Against Imitation

45 Pages Posted: 4 Apr 2012

See all articles by Emeric Henry

Emeric Henry

Sciences Po

Francisco Ruiz-Aliseda

Pontifical Catholic University of Chile

Date Written: March 2012

Abstract

A large portion of innovators do not patent their inventions. This is a relative puzzle since innovators are often perceived to be at the mercy of imitators in the absence of legal protection. In practice, innovators however invest actively in making their products technologically hard to reverse-engineer. We consider the dynamics of imitation and investment in such protection technologies, both by the innovator and by imitators. We show that it can justify high level of profits beyond patents and can account for the differences across sectors in the propensity to patent. Surprisingly, in general, the protection technologies that yield the highest profits for the innovator are expensive and do not protect well. Our model also allows us to draw conclusions on the dynamics of mobility of researchers in innovative industries.

Keywords: complexity, dynamic games, imitation, innovation

JEL Classification: C73, O31, O32, O33, O34

Suggested Citation

Henry, Emeric and Ruiz-Aliseda, Francisco, Innovation Beyond Patents: Technological Complexity as a Protection Against Imitation (March 2012). CEPR Discussion Paper No. DP8870. Available at SSRN: https://ssrn.com/abstract=2034088

Emeric Henry (Contact Author)

Sciences Po ( email )

27 rue Saint-Guillaume
Paris Cedex 07, 75337
France

Francisco Ruiz-Aliseda

Pontifical Catholic University of Chile ( email )

Vicuna Mackenna 4860
Santiago, 99999
Chile

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