Experimentation, Patents, and Innovation-Reference-Cited by-同舟云学术

Experimentation, Patents, and Innovation

Published:2011-02-01 Issue:1 Volume:3 Page:37-77
ISSN:1945-7669
Container-title:American Economic Journal: Microeconomics
language:en
Short-container-title:American Economic Journal: Microeconomics

Author:

Acemoglu Daron¹,Bimpikis Kostas²,Ozdaglar Asuman³

Affiliation:

1. Department of Economics, Massachusetts Institute of Technology, 50 Memorial Drive, Building E52-380B, Cambridge, MA 02142.

2. Operations Research Center, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Building E40-149, Cambridge, MA 02139.

3. Department of Electrical Engineering and Computer Science, Massachusetts Institute of Technology, 77 Massachusetts Avenue, Building 32-D630, Cambridge, MA 02139.

Abstract

This paper studies a simple model of experimentation and innovation. Our analysis suggests that patents improve the allocation of resources by encouraging rapid experimentation and efficient ex post transfer of knowledge. Each firm receives a signal on the success probability of a project and decides when to experiment. Successes can be copied. First, we assume that signal qualities are the same. Symmetric equilibria involve delayed and staggered experimentation, whereas the optimal allocation never involves delays and may involve simultaneous experimentation. Appropriately designed patents implement the optimal allocation. Finally, we discuss the case when signals differ and are private information. (JEL D82, D83, O31, O33, O34)

Publisher

American Economic Association

Subject

General Economics, Econometrics and Finance

Link

https://pubs.aeaweb.org/doi/pdf/10.1257/mic.3.1.37

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