Tuesday, July 13, 2010
Posted by D. Daniel Sokol
Jolian McHardy (Department of Economics, The University of Sheffield) have a new paper on Strategic Behavious of Firms in a Duopoly and the Impact of Extending the Patenting Period.
ABSTRACT: This paper deals with strategic behaviour of firms in a duopoly, subsequent to the claim by one firm that it has reduced the unit cost of production. A variety of possible strategic equilibria are discussed in the context of a duopoly game between a multinational and a local firm. In the context of an extended uniform period of patenting, as finally agreed in the Uruguay round (1994), firms have increased incentive to take patents. In the presence of cost differences, the act of taking process-patents has implications for the equilibrium output strategies of the duopoly firms and sometimes may have a negative overall welfare effect for the local producer and consumers.