Patent protection under endogenous product differentiation

Mukherjee, Arijit

Abstract

It is generally believed that, if weak patent protection does not affect innovation, it makes consumers and society better off compared to strong patent protection by increasing the intensity of competition. We show that this conclusion may not be valid if the innovator can take other non-production strategies, such as product differentiation, which helps to reduce the intensity of competition. Weak patent protection may reduce consumer surplus and social welfare by inducing product differentiation. 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 strong patent protection even if it does not affect innovation.

Citation

Mukherjee, A. (2014). Patent protection under endogenous product differentiation. Asia-Pacific Journal of Accounting and Economics, 21(1), 78-93. doi:10.1080/16081625.2014.858389

• Journal Article Type: Article
• Acceptance Date: Oct 17, 2013
• Online Publication Date: Dec 3, 2013
• Publication Date: Jan 2, 2014
• Deposit Date: Dec 10, 2018
• Journal: Asia-Pacific Journal of Accounting & Economics
• Print ISSN: 1608-1625
• Electronic ISSN: 2164-2257
• Publisher: Taylor & Francis (Routledge)
• Peer Reviewed: Peer Reviewed
• Volume: 21
• Issue: 1
• Pages: 78-93
• DOI: https://doi.org/10.1080/16081625.2014.858389
• Keywords: patent protection; product differentiation; welfare
• Public URL: https://nottingham-repository.worktribe.com/output/1394559
• Publisher URL: https://www.tandfonline.com/doi/abs/10.1080/16081625.2014.858389