Optimal Patent Design and the Diffusion of Innovations

RAND JOURNAL OF ECONOMICS, Vol. 26 No. 1

Posted: 20 Aug 1998

See all articles by Carmen Matutes

Carmen Matutes

affiliation not provided to SSRN

Pierre Regibeau

University of Essex - Department of Economics; Centre for Economic Policy Research (CEPR)

Katharine Rockett

University of Essex - Department of Economics; Centre for Economic Policy Research (CEPR)

Abstract

Innovators who have made significant breakthroughs may be tempted to get a head start in developing the applications of a new discovery before commercializing any new product. We consider how this socially undesirable waiting period and the pattern of development of subsequent innovations are affected by two patent protection regimes which we call "length" and "scope" protection. Our main finding is that the scope of the patent, and not its length, is the dimension that should be used to induce early disclosure of fundamental innovations while still preserving firms' incentive to do R&D. Furthermore, the optimal protection increases with rivalry in the markets for applications.

JEL Classification: O32

Suggested Citation

Matutes, Carmen and Regibeau, Pierre and Rockett, Katharine, Optimal Patent Design and the Diffusion of Innovations. RAND JOURNAL OF ECONOMICS, Vol. 26 No. 1. Available at SSRN: https://ssrn.com/abstract=6954

Carmen Matutes

affiliation not provided to SSRN

Pierre Regibeau

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
+44 1206 872 731 (Phone)
+44 1206 873 598 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Katharine Rockett (Contact Author)

University of Essex - Department of Economics ( email )

Wivenhoe Park
Colchester CO4 3SQ
United Kingdom
+44 1206 873 333 (Phone)
+44 1206 873 724 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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