Work

Preemption, Leapfrogging, and Competition in Patent Races

Year: 1983

Type: article

Abstract: This paper investigates when patent races will be characterized by vigorous competition and when they will degenerate into a monopoly. Under some conditions, a firm with an arbitrarily small headstart can preempt its rivals. Such 'e-preemption' is shown to depend on whether a firm that is behind in the patent race, as measured by the expected time remaining until discovery, can't 'leapfrog' the competition and become the new leader. An example of an R and D game with random discovery illustrates how e-preemption can occur when leapfrogging is impossible. A multi-stage R and D process allows leapfrogging and thus permits competition. A similar conclusion emerges in a model of a deterministic patent race with imperfect monitoring of rival firms' R and D investment activities.

Source: European Economic Review

DOI: 10.7916/d8r21bbj

Authors: Stiglitz, Joseph E., Fudenberg, Drew, Gilbert, Richard J., Tirole, Jean

Institutions: University of California, Berkeley, Princeton University, École nationale des ponts et chaussées

Language: English

Topic: Intellectual Property and Patents

Subfield: Management of Technology and Innovation

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: bronze

OpenAlex ID: W2139984237

FWCI: 15.73

Cites: 18

Cited by: 585

Related to: 10