Experimentation, Patents, and Innovation
Name
Acemoglu_Experimentation patents.pdf
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386.79 KB
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Adobe PDF
Checksum (MD5)
ee701ab91edcaffa37fae0b936d51833
Author(s)
Acemoglu, Daron
Bimpikis, Konstantinos
Ozdaglar, Asuman E.
Date Issued
February 2011
Journal
American Economic Journal: Microeconomics
Publisher
American Economic Association
Citation
Acemoglu, Daron, Kostas Bimpikis, and Asuman Ozdaglar. 2011. "Experimentation, Patents, and Innovation." American Economic Journal: Microeconomics, 3(1): 37–77.
Version
Author's final manuscript
Abstract
This paper studies a simple model of experimentation and innovation. Our analysis suggests that patents improve the allocation of resources by encouraging rapid experimentation and efficient ex post transfer of knowledge. Each firm receives a signal on the success probability of a project and decides when to experiment. Successes can be copied. First, we assume that signal qualities are the same. Symmetric equilibria involve delayed and staggered experimentation, whereas the optimal allocation never involves delays and may involve simultaneous experimentation. Appropriately designed patents implement the optimal allocation. Finally, we discuss the case when signals differ and are private information.
MIT Department
Massachusetts Institute of Technology. Department of Economics
Massachusetts Institute of Technology. Department of Electrical Engineering and Computer Science
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike 3.0
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1257/mic.3.1.37
