Electronic Resource
Berkeley, Calif.
:
Berkeley Electronic Press (now: De Gruyter)
Review of law and economics
3.2007, 2, art14
ISSN:
1555-5879
Source:
Berkeley Electronic Press Academic Journals
Topics:
Law
,
Economics
Notes:
Sequential innovation with actual patent infringement and uncertainty in litigation is analyzed. Comparative statics shows that within a wide range of model parameters, a basic researcher holding a patent is able to extract all of the profit facilitated by the basic innovation. The patent holder achieves this by offering a licensing contract which the subsequent innovator accepts in the shadow of paying infringement damages. It is further demonstrated that, under rather general circumstances, broader patent breadth may diminish the patent holder's incentive to innovate: that is to extract all of the profit from the subsequent innovator commercializing the innovation.
Type of Medium:
Electronic Resource
URL:
http://www.bepress.com/rle/vol3/iss2/art14
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