Duopoly firms engaged in a standard two-stage game of R&D and Cournot competition are caught in a prisoner's dilemma for their R&D decisions whenever spillover effects are low. This effect works to the advantage of consumers and society. This result provides an interesting perspective on the...

We consider the standard two-stage game of R&D and Cournot competition with ex ante identical firms but depart from the literature in assuming that R&D is characterized by mildly, instead of strongly, decreasing returns to scale. We establish that only extreme R&D levels are possible at...

The apparent technological leadership of a firm at a given moment in time often hides the fact that a market dominant position is not necessarily secured forever. To what extent can challengers or potential entrants catch up with technological leaders ? Examples illustrating the decline of some...

We study optimal patent design, contrasting the case that two or more innovations are needed to operate a new technology with the traditional case that a single innovation is directly commercialisable. The major finding is that with complementary innovations the patentability requirements should...

Dans une course à l'innovation, les possibilités de rattrapage d'une entreprise distancée sont-elles aiguisées ou au contraire exclues par la présence d'externalités de R&D ? Pudenberg, Gilbert, Stiglitz et Tirole montrent dans une course au brevet avec observation imparfaite de...

We consider a modification of the standard two-stage model wherein two high-cost firms conduct cost-reducing R&D, in a setting with spillovers, and then Cournot compete against a low-cost firm that engages in no R&D. Two R&D cooperation scenarios are presented: the R&D cartel and the joint lab....

This paper explores the impacts of absorptive capacity on the behavior of innovating firms competing in a dynamic patent race. We introduce spillovers and absorptive capacities in the Fudenberg, Gilbert, Stiglitz and Tirole patent race with memory. First, we show that incorporating absorptive...

Consider a marketing division of a monopoly that faces two marketing options: market enlargement and elasticity improvement. These options are conceived in terms of the target of the firm's advertising campaigns: potential new consumers versus existing consumers. Using a CES demand function in a...

We study the effect of the fragmentation of intellectual property rights on optimal patent design. The major finding is that when several complementary innovative components must be assembled to operate a new technology, the patentability requirements should be stronger than in the case of...