Technological competition, patent protection, and diffusion of innovations : policy-oriented approach

Abstract

The central aspect of technology policy-making is its concern with the creative process through the development and diffusion of new technologies. Creation, or generation, of new technologies (innovations) is necessary but not sufficient to enhance economic social welfare. New technologies and innovations should also gain economic significance by displacing existing inferior rivals. The policy-maker``s task is to enhance the rate of experimentation and the efficient selection of innovations in market and pre-market environments, which are the foci of this thesis. In this regard, the technology system``s perspective is indispensable, and the thesis has tried to maintain and follow this perspective. More specifically, among others, the thesis has emphasized the following aspects. Disclosure requirement of patent system enables innovators other than the patentee to improve the patented technology. Starting from patentee``s efforts to disclose the minimum amount of information on patented technology to avoid profit erosion from competition with improved products in the product market, the thesis addresses a novel question of how to induce a patentee to voluntarily disclose the maximum amount of information on his/her invention. Based upon recent literature on patent and related innovation policy under sequential innovation, it is argued that, with properly adjusted patent scope, competition policy should allow ex post agreements for production joint ventures between sequential innovators so as to encourage the voluntary disclosure of information by an early innovator to subsequent innovators. The nature (or size) of innovation is crucial in understanding the incentive to innovate. The thesis addresses the interrelationship between the nature of innovation, the incentive to license new technology, and the evolution of an industry. Under the Hahn-Novshek condition for Cournot duopoly, the small innovations are likely to be licensed. This behavior is innocent in the...