An Auction Model of Intellectual Property Protection: Patent Versus Copyright

  • Michael Waterson
  • Norman Ireland


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.


Patent Protection Intellectual Property Protection Rand Journal Auction Model Patent Race 
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Copyright information

© Springer Science+Business Media Dordrecht 2000

Authors and Affiliations

  • Michael Waterson
    • 1
  • Norman Ireland
    • 1
  1. 1.University of WarwickUK

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