Abstract
In this paper several firms compete for the right to obtain intellectual property protection for a basic idea which has subsequent potential applications. The modelling employs an auction analogy, taking the context to be an n-player all-pay auction, with a reserve. We find that, even taking only firms’ own utilities into account, welfare has no interior maximum, so that either maximal, or minimal, protection is optimal. Through examining a simple version of this game, we suggest that software is socially better protected by means of copyright rather than patent.
We should like to thank several participants at the 10th International ADRES conference, Strasbourg, June 1996, at the WZB Conference on Advances in Industrial organisation, Berlin October 1996, and an Economics of Law Study Group, Leicester, June 1997 (particularly Clive Fraser), also Marcel Canoy, Paul Dobson, Tuomas Takalo and two anonymous referees for helpful comments and suggestions.
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Waterson, M., Ireland, N. (2000). An Auction Model of Intellectual Property Protection: Patent Versus Copyright. In: The Economics and Econometrics of Innovation. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-3194-1_9
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DOI: https://doi.org/10.1007/978-1-4757-3194-1_9
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4419-4971-4
Online ISBN: 978-1-4757-3194-1
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