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On Competition and the Strategic Management of Intellectual Property in Oligopoly
Author(s) -
Jansen Jos
Publication year - 2011
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1530-9134.2011.00316.x
Subject(s) - cournot competition , incentive , competitor analysis , oligopoly , secrecy , industrial organization , microeconomics , competition (biology) , bertrand competition , intellectual property , product differentiation , product market , product (mathematics) , business , product innovation , economics , strategic complements , marketing , computer science , ecology , geometry , computer security , mathematics , biology , operating system
An innovative firm with private information about its indivisible process innovation chooses strategically whether to apply for a patent with probabilistic validity or rely on secrecy. By doing so, the firm manages its rivals’ beliefs about the size of the innovation, and affects the incentives in the product market. A Cournot competitor tends to patent big innovations, and keep small innovations secret, while a Bertrand competitor adopts the reverse strategy. Increasing the number of firms gives a greater (smaller) patenting incentive for Cournot (Bertrand) competitors. Increasing the degree of product substitutability increases the incentives to patent the innovation.