We study an infinite-horizon cumulative innovation model, in which patents are characterized bytheir length and the likelihood of being ruled valid in a patent infringement litigation. Strengtheningpatent protection via a greater validity or length has two opposing effects on innovation: 1)...

Licensors of patents essential to a standard are often required to license on reasonable and non-discriminatory (RAND) terms. Using a model with owners of essential patents and licensees who invest into standard-conforming technologies, this paper demonstrates that the non-discriminatory...

Patent race models assume that an innovator wins the only patent covering a product. But when technologies are complex, this property right is defective: ownership of a product's technology is shared, not exclusive. In that case I show that if patent standards are low, firms build "thickets" of...

In a world of zero transaction costs, one should observe optimal invention and innovation. As long as a system of enforceable contracts were in place, firms with inventive capacity and firms requiring inventions would negotiate for the optimal production of new creations. With adequate...

In this paper, we consider products that are composed of distinct components that can be shared with rival firms through licensing agreements. In contrast to the standard licensing settings in which firms make binary choices (whether to license or not), the innovator decides on the set of...

In this article we examine the interaction between firms' product and process innovation decisions and the role patent policy can play in directing technological change toward a socially efficient mix of innovations. Product innovation is a variant on a pioneer's new product; process innovation...

A growing body of research uses patent citations to analyze economic phenomena, and many of these papers are interested in the distribution of citations over the life of a patent. However, this question leads directly to the age-year-cohort identification problem, i.e. co-linearity between the...

We study the incentives of a product innovator to license its product partially to a potential entrant. In a duopolistic setting we consider product design of a modular nature, which enables the incumbent to license some modules of its innovation. Competition is characterized by the size of the...

Current controversies over patent policy place standard-setting organizations (SSOs) on a collision course with antitrust law. Recent theoretical research conjectures that, in an SSO, patent owners can “hold up” patent users in the sense of demanding high royalties for a patented input after...

Patent law is under-theorized in the sense that the predominating incentive-based justifications cannot by themselves adequately explain empirical evidence on patenting gathered by research economists. This article provides an alternative justification for patent law based on private transaction...