Fragmented Property Rights and Incentives for R&D

Clark, Derek J.; Konrad, Kai A.
May 2008
Management Science;May2008, Vol. 54 Issue 5, p969
Academic Journal
Where product innovation requires several complementary patents, fragmented property rights can limit firms' willingness to invest in R&D. We consider the research intensity in multiple simultaneous R&D contests and how it depends on whether firms already hold relevant patents as well as the availability of an option to invent around. A measure of technological uncertainty is also analyzed. The multiple patent product involves an important hold-up problem that can reduce the overall R&D effort. Invent-around options moderate this problem. We also analyze targeted equilibria in which the aim of R&D can be to hold up a rival.


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