Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Monday, September 10, 2012

Patents, competition and firms’ innovation incentives

Posted by D. Daniel Sokol

Pilar Beneito (University of Valencia and ERICES) Maria E. Rochina-Barrachina (University of Valencia and ERICES) and Amparo Sanchis (University of Valencia and ERICES) discuss Patents, competition and firms’ innovation incentives.

ABSTRACT: In this paper we analyze how industrial property rights (IPRs), measured by patents granted, affect competition at the industry level, and their induced effects on firms’ innovation incentives. We use for that purpose a panel dataset of Spanish manufacturing firms for the period 1990-2006. Using indicators of fundamentals of competitive pressure and factor analysis techniques, we construct a new synthetic measure of competition. Our results indicate that although the use of IPRs (in terms of industry patenting intensity) reduces market competition, it may also encourage firms’ innovation incentives (in terms of firms’ R&D expenditures and the number of product innovations).

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