The European Union will be introducing a Europe-wide patent, the so-called Community Patent. Its aim is to foster innovative activity, but strategic effects between firms competing in Ramp;D have not been considered in the official discourse. We show that, even if these are taken into account,...

We prove the existence of symmetric pure Cournot equilibria with heterogeneous goods under the following condition: Each firm reacts to a rise in competitor's output in such a way that its market price does not rise.

We show that asymmetric equilibria may exist in an ex ante symmetric step-by-step R&D if product market competition is intense. The corresponding symmetric equilibrium is unstable and therefore less likely the one selected, while the asymmetric ones result in lower economic growth (reversing...