Franchising: Between innovation and imitation

Innovation, Imitation and Open Source

An extensive empirical literature indicates that, even without formal intellectual property rights, innovators enjoy a variety of first-mover advantages and that ‘imitation’ is itself a costly activity. There is also accumulating evidence that an ‘open’ approach to knowledge production can deliver substantial efficiency advantages. This paper introduces a formal framework incorporating all of t...

Sequential innovation, patents, and imitation

We argue that when innovation is “sequential” (so that each successive invention builds in an essential way on its predecessors) and “complementary” (so that each potential innovator takes a different research line), patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such protection. Furth...

Innovation, Imitation, and Market Structure

How do market structure and the characteristics of goods affect the incentives to create new goods (to innovate) and to copy them (to imitate).In this paper we consider an economy in which goods differ according to their production technology, which determines the market structure, and according to the fraction of R&D (think knowledge or information) that it takes to create them. After innovati...

Innovation by Imitation?

Innovation and imitation incentives in dynamic duopoly

We study entry in a growing market by ex-ante symmetric duopolists when sunk costs differ for the innovating and imitating firm. Strategic competition takes the form either of a preemption race or of a war of attrition, the latter being likelier when demand uncertainty is high. Industry value is maximized when firms seek neither to race nor to delay investment. Free imitation is socially costly...