Patent Height and Competition in Product Improvements

The stringency of novelty requirements that patent offices use in judging patentability defines the height of patent protection. The author studies patent height in a duopoly where firms compete in product improvements. A competitor who wants to invent around the other's patent is restricted by a minimum improvement level. The author shows that low patent protection does not affect market equilibrium without patent protection. A patent holder can lose with medium patent heights but not if patents provide high protection. The non patent holder can gain with medium heights but is increasingly worse off with higher patent protection. Copyright 1996 by Blackwell Publishing Ltd.

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