Center for Economic Research, Department of Economics, University of Minnesota
It may be advantageous to provide a variety of kinds of patent protection
to heterogenous innovations. Innovations which benefit society largely
through their use as building blocks to future inventions may require a different
scope of protection in order to be encouraged, since expected profits
are often decreasing in a products usefulness to others when the others are
competitors. We model the problem of designing an optimal patent menu
when the fertility of an innovation in generating more innovations cannot
be observed when the patent is granted and characterize the optimal menu
when breadth is a choice variable of the patent authority. If breadth is
not definable at the time of the patent due to uncertainty about the kinds
of future products that will arise, the menu can still be implemented with
buyout fees. Evidence of heterogeneous fertility is presented using patent
data from the US.
Hopenhayn, H.A. and Mitchell, M.F., (1999), "Innovation Fertility and Patent Design", Discussion Paper No. 303, Center for Economic Research, Department of Economics, University of Minnesota.
Hopenhayn, Hugo A.; Mitchell, Matthew F..
Innovation Fertility and Patent Design.
Center for Economic Research, Department of Economics, University of Minnesota.
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