The Decision to Patent with Horizontal Product Differentiation
In this chapter we introduce the patenting decision into an oligopolistic model of horizontally differentiated products. The analysis presented here in large parts follows Zaby (2009b).We assume that a drastic product innovation is released on a new market where rivals may enter with non-infringing products as long as patent protection is not perfect. Product characteristics are assumed to be continuously distributed on a circle of unit-circumference where a patent protects a given range on the circle from the entry of rival firms.
KeywordsCritical Threshold Reservation Price Market Entry Social Welfare Function Patent Protection
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