ch21 - Chapter 21 Patents and Patent Policy Learning...

Info icon This preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Chapter 21: Patents and Patent Policy Learning Objectives The students will learn to 1. Discuss the issues involved in determining the optimal breadth of a patent. 2. Use data on market demand, marginal production costs and the probability of research success to set up the payoff matrix for a patent race game. The student will also be able to determine the Nash equilibria for various patent race games. 3. Discuss reasons for over or under investment in R&D based on market structure, patent office policy, and alternative parameterizations of demand and technology (cost). 4. Use the models developed in Chapter 6 to analyze when patents can be used to protect a monopoly position or to engage in predation. Students will be able to explain why monopolists may be more likely to engage in research than potential entrants. 5. Explain the intuition behind “sleeping” patents and numerically solve a model where there is an incentive to patent a product and then not use the patent. 6. Explain the incentives for technology licensing. The student will also be able to discuss the advantages and disadvantages of straight royalties as compared to fixed fees or two- part tariffs, and to compare revenues from alternative licensing strategies. 7. Understand how innovation builds on innovation so that strong patent laws can result in a “patent thicket” in which a firm must obtain multiple licenses to offer any new product. 8. Understand the basics of a Poisson relationship. Suggested Lecture Outline: Spend one fifty-minute long lecture on this chapter. Lecture 1: 1. Models of optimal patent length Benefits to the firms Benefits to society 2. Patent breadth 3. Patent races Computing expected profits Finding the Nash equilibria 4. Welfare implications of patent races 5. Preclusion by existing firms 6. Sleeping patents and preclusion 7. Technology licensing Cournot versus Bertrand models of technology licensing licensing with drastic innovations and the value of a monopoly social benefits of licensing and incentives for firms to license 8. Hall and Ziedonis (2001) study of semiconductor patenting 173
Image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Suggestions for the Instructor: 1. Motivate the students with a number of good examples. 2. Discuss when patents are appropriate and when they might not be. Class discussion of whether software patents make sense can raise many interesting issues. 3. A project that investigates the patent process of a popular product may be interesting. 4. A project that involves searching the Patent Office database would also be interesting. Solutions to End of the Chapter Problems: Problem 1 (a) We need to find profits as a function of K and for the different possible situations: neither firm has the innovation, only one firm has the innovation, and both firms have the innovation. If neither firm has the innovation, competition is Cournot with symmetric costs of 100 each. So, we find quantities, price and profits as follows: 2500 2500 50 50 2 1 2 1 , , q , q
Image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern