2019
DOI: 10.1111/1756-2171.12287
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Sequential innovation, patent policy, and the dynamics of the replacement effect

Abstract: I study how patent policy-characterized by patent length and forward protection-affects Research and Development (R&D) dynamics, leadership persistence, and market structure. Firms' R&D investments increase as the patent's expiration date approaches. Through forward protection, followers internalize the leader's replacement effect. In protective systems, this internalization is substantial, reversing Arrow's traditional result: followers invest less than leaders at every moment of the patent's life. I study th… Show more

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Cited by 37 publications
(13 citation statements)
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References 57 publications
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“…The notion of benefiting from innovation is still a key issue for innovators. Many potential innovators find incentives to innovate in expected (private) returns and are thus concerned with the protection and control of the innovation and the related knowledge (Colombelli et al 2019;Parra, 2019;Schmeiss et al, 2019). Nevertheless, changes have occurred in the innovation environment and in the premises of appropriability (Belderbos et al, 2014;Dhanaraj and Parkhe, 2006;Holgersson et al, 2018;Kale et al, 2000;Srivastava and Gnyawali, 2011).…”
Section: Innovation Appropriability: Conceptual Background and The Need For An Updatementioning
confidence: 99%
See 1 more Smart Citation
“…The notion of benefiting from innovation is still a key issue for innovators. Many potential innovators find incentives to innovate in expected (private) returns and are thus concerned with the protection and control of the innovation and the related knowledge (Colombelli et al 2019;Parra, 2019;Schmeiss et al, 2019). Nevertheless, changes have occurred in the innovation environment and in the premises of appropriability (Belderbos et al, 2014;Dhanaraj and Parkhe, 2006;Holgersson et al, 2018;Kale et al, 2000;Srivastava and Gnyawali, 2011).…”
Section: Innovation Appropriability: Conceptual Background and The Need For An Updatementioning
confidence: 99%
“…In our data, 139 articles address licensing, and 34 address the buying and selling of intellectual property. In addition to research that discusses transactions, there are also studies that consider signaling (e. g., Hannah et al, 2014;2019;Somaya, 2012) and collaboration (116 articles). Although leverage-oriented processes refer to the active use of isolating appropriability mechanisms and/or complementary assets, they do not emphasize preclusion or individual use.…”
Section: Appropriation Processes: Taking Action To Realize the Appropriability Potentialmentioning
confidence: 99%
“…However, some studies show that patent policies have no significant impact on patent output [15,30,31]. Additionally, patent policies may have negative effects, as excessive protection policies decrease the pace of innovation [32]. Despite the above controversy, it is generally believed that public patenting-promoting policies will promote the output of academic patents [20,27].…”
Section: Literature Review and Hypothesesmentioning
confidence: 99%
“…To create new economic sectors, rare resources and highlyefficient technologies, intensifying the economy's growth in the new direction, are indispensable [26]. Longer protection of patents keeps the enterprises' investments distant in time and space [27]. Studies have confirmed that the role of patents in the development of the market position of branded products has increased, with the use of valuable innovations in a given country's economy [28].…”
Section: Related Literaturementioning
confidence: 99%