Cooperation versus competition in product innovation

Abstract

This paper analyzes the optimal antitrust policy in the context of a patent race. In a simplified model, we identify the conditions under which allowing cooperation yields greater welfare than imposing competition. In view of our results, we discuss, critically, the current European policy towards R&D cooperation.Competition, Product innovation, Antitrust policy, Joint ventures, Knowledge externalities,

Patenting as a competitive tactic in multipoint competition

“…Also for example, goods‐producing industries require specialization in production that leads to concentration in geographic areas (Audretsch and Feldman, 1996; Kelly and Hageman, 1999; Ejermo, 2005) and the consequent building of infrastructure such as distribution channels, factor markets, or complementary products or services. Extending Gonzalez‐Maestra and Penarrubia (2005) on product innovation, the existence of such factors can promote competition rather than cooperation in product innovation, and thus increase patenting use. Similarly, firms having a greater requirement for knowledge specialization (and thus spawn a greater number of less‐obvious innovations), also tend to be geographically concentrated (Kelly and Hageman, 1999; Ejermo, 2005).…”