Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/46351
Authors: 
Choi, Jay Pil
Gerlach, Heiko
Year of Publication: 
2011
Series/Report no.: 
CESifo working paper: Industrial Organisation 3425
Abstract: 
This paper analyzes selection biases in the project choice of complementary technologies that are used in combination to produce a final product. In the presence of complementary technologies, patents allow innovating firms to hold up rivals who succeed in developing other system components. This hold-up potential induces firms to preemptively claim stakes on component property rights and excessively cluster their R&D efforts on a relatively easier technology. This selection bias is persistent and robust to several model extensions. Implications for the optimal design of intellectual property rights are discussed. We also analyze selection biases that arise when firms differ in research capabilities.
Subjects: 
R&D project choice
preemptive duplication
complementary innovations
JEL: 
D43
L13
O30
Document Type: 
Working Paper

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