We are particularly grateful to the Editor of this journal, two anonymous referees and Paul Belleflamme for excellent comments and suggestions. This paper has also benefited from discussions with Rabah Amir, Achille Puggioni, Xavier Wauthy and seminar participants at CEREC, CORE, University of Namur, University of Valencia, PET2009 and EARIE 2010. The authors gratefully acknowledge financial support from the Belgian Inter-university Attraction Pole IAP/PAI P9/06 and Wouter Vergote is thankful for financial support from the FNRS. The responsibility for remaining errors is ours.
Endogenous Network Formation in Patent Contests And Its Role as A Barrier to Entry†
Article first published online: 19 DEC 2011
© 2011 The Authors. The Journal of Industrial Economics © 2011 Blackwell Publishing Ltd and the Editorial Board of The Journal of Industrial Economics
The Journal of Industrial Economics
Volume 59, Issue 4, pages 529–551, December 2011
How to Cite
Marinucci, M. and Vergote, W. (2011), Endogenous Network Formation in Patent Contests And Its Role as A Barrier to Entry. The Journal of Industrial Economics, 59: 529–551. doi: 10.1111/j.1467-6451.2011.00466.x
- Issue published online: 19 DEC 2011
- Article first published online: 19 DEC 2011
- Belgian Inter-university Attraction Pole
In a setting of R&D competition, we study how collaboration affects strategic decisions during a patent contest, and how the latter influences the collaboration network structures the firms can form. We use an all pay auction approach to endogenize both network formation and R&D intensities, and to take heterogeneous and private valuations for patents into account. We find that the complete network is not always the only pairwise stable one. The other stable networks have the realistic property that some firms drop out of the contest. Thus, ‘weak’ cooperation can serve as a barrier to entry on the market for innovation.