Antitrust & Competition Policy Blog

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

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Tuesday, September 3, 2013

Patent protection under endogenous product differentiation

Posted by D. Daniel Sokol

Arijit Mukherjee (School of Business and Economics, Loughborough University, UK) theorizes about Patent protection under endogenous product differentiation.

ABSTRACT: It is generally believed that a weak patent protection makes the consumers and the society better off compared to a strong patent protection by increasing the intensity of competition if the weak patent protection does not affect innovation. We show that this conclusion may not hold if the innovator can take other non-production strategies, such as product differentiation, to reduce the intensity of product-market competition. A weak patent protection may reduce consumer surplus and social welfare by inducing product differentiation by the innovator. We show that the type of product-market competition and the market demand function play important roles in this respect. Hence, there can be an argument for a strong patent protection even if it does not affect innovation.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/09/patent-protection-under-endogenous-product-differentiation.html

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