A Patentability Requirement for Sequential Innovation

Posted: 7 Sep 1998

See all articles by Ted O'Donoghue

Ted O'Donoghue

Cornell University - Department of Economics

Abstract

This article investigates patent protection for a long sequence of innovations where firms repeatedly supersede each other. Incentives for R&D can be insufficient if successful firms earn market profit only until competitors achieve something better. To correct this problem, patents must provide protection against future innovators. This article proposes using a patentability requirement--a minimum innovation size required for patents. A patentability requirement can stimulate R&D investment and increase dynamic efficiency. Intuitively, requiring firms to pursue larger innovations prolongs market incumbency because larger innovations are harder to achieve, and longer market incumbency implies an increased reward to innovation.

JEL Classification: O31, O32, O34

Suggested Citation

O'Donoghue, Ted, A Patentability Requirement for Sequential Innovation. Available at SSRN: https://ssrn.com/abstract=109809

Ted O'Donoghue (Contact Author)

Cornell University - Department of Economics ( email )

414 Uris Hall
Ithaca, NY 14853-7601
United States
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