We thank Stefan Behringer, Lee Branstetter, Daniel Chen, Iain Cockburn, Partha Dasgupta, Nancy Gallini, Alfonso Gambardella, Bronwyn Hall, Adam Jaffe, Lawrence Lessig, David Levine, Suzanne Scotchmer, Jean Tirole, Michael Whinston, two referees, the editor Joseph Harrington, and participants at many seminars and conferences for helpful comments. We gratefully acknowledge research support from the NSF.
Sequential innovation, patents, and imitation
Article first published online: 12 OCT 2009
© 2009, RAND
The RAND Journal of Economics
Volume 40, Issue 4, pages 611–635, Winter 2009
How to Cite
Bessen, J. and Maskin, E. (2009), Sequential innovation, patents, and imitation. The RAND Journal of Economics, 40: 611–635. doi: 10.1111/j.1756-2171.2009.00081.x
- Issue published online: 12 OCT 2009
- Article first published online: 12 OCT 2009
We argue that when innovation is “sequential” (so that each successive invention builds in an essential way on its predecessors) and “complementary” (so that each potential innovator takes a different research line), patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such protection. Furthermore, an inventor's prospective profit may actually be enhanced by competition and imitation. Our sequential model of innovation appears to explain evidence from a natural experiment in the software industry.