Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/32252 
Authors: 
Year of Publication: 
2009
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods No. 2009,13
Publisher: 
Max Planck Institute for Research on Collective Goods, Bonn
Abstract: 
An innovative firm chooses strategically whether to patent its process innovation or rely on secrecy. By doing so, the firm manages its rival's beliefs about the size of the innovation, and affects the incentives in the product market. Different measures of competitive pressure in the product market have different effects on the equilibrium patenting choices of an innovative firm with unknown costs and probabilistic patent validity. Increasing the number of firms (degree of product substitutability) gives a smaller (greater) patenting incentive. Switching from Bertrand to Cournot competition gives a smaller (greater) patenting incentive if patent protection is weak (strong).
Subjects: 
Bertrand and Cournot competition
oligopoly
product differentiation
entry
asymmetric information
strategic disclosure
stochastic patent
trade secret
process innovation
imitation
JEL: 
D82
L13
O31
O32
Document Type: 
Working Paper

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