Patent-investment games under asymmetric information
نویسندگان
چکیده
This paper analyzes preemptive patenting in a two-stage real options game where an incumbent firm competes with a potential entrant firm for the patent of a substitute product in a product market with profit flow uncertainty. The incumbent suffers loss of monopoly in the product market if the entrant acquires the patent of a substitute product and later commercializes the product. Our patent-investment game model assumes that the entrant has complete information on the incumbent’s commercialization cost while the incumbent only knows the distribution of the entrant’s cost. We investigate the impact of information asymmetry on the preemption strategies adopted by the two competing firms on patenting the substitute product by comparing the optimal preemption strategies and the real option value functions of the two competing firms under complete information and information asymmetry. Our analysis reveals that the informationally disadvantaged incumbent always suffers from loss in its real option value of investment since it tends to act more aggressively in competing for the patent. On the other hand, the real option value of investment of the informationally advantaged entrant may be undermined or enhanced. The incumbent’s aggressive response under information asymmetry may lead to reversal of winner in the patent race. We also examine how information asymmetry may affect the occurrence of sleeping patent and the corresponding expected duration between the two stages of patenting and product commercialization.
منابع مشابه
A game Theoretic Approach to Pricing, Advertising and Collection Decisions adjustment in a closed-loop supply chain
This paper considers advertising, collection and pricing decisions simultaneously for a closed-loop supplychain(CLSC) with one manufacturer(he) and two retailers(she). A multiplicatively separable new demand function is proposed which influenced by pricing and advertising. In this paper, three well-known scenarios in the game theory including the Nash, Stackelberg and Cooperative games are expl...
متن کاملContractual signaling, relationship-specific investment and exclusive agreements
I analyze a simple model of hold-up with asymmetric information at the contracting stage. I show that contractual signalling and e¢ ciency of investment can conict if only quantity is contractible. This is because contracted quantity encourages investment in the relationship but also signals information. This conict generates ine¢ cient equilibria in terms of investment. Contracting on exclus...
متن کاملPreemptive patenting under uncertainty and asymmetric information
This paper examines the investment behaviour of an incumbent and a po tential entrant that are competing for a patent with a stochastic payo We incorporate asymmetric information into the model by assuming that the chal lenger has complete information about the incumbent whereas the latter does not know the precise value of its opponent s investment cost We nd that even a small probability of b...
متن کاملThe Effect of Asymmetric Information in the Money Market on Investment, Employment, and Production in Iran
Nowadays, banks are considered as one of the major components of the financial system of a country and any deficits and malfunction in the banking system will negatively affect the performance of the real sector. Therefore, there is a need for more investigation on the behavior of banks and factors affecting those behaviors in a country. One of the issues that affect the behavior of banks is sy...
متن کاملDavid vs. Goliath: An Analysis of Asymmetric Mixed-Strategy Games and Experimental Evidence
Mixed strategies are widely used to model strategic situations in diverse fields such as economics, marketing, political science, and biology. However, some of the implications of asymmetric mixed-strategy solutions are counterintuitive. We develop a stylized model of patent race to examine some of these implications. In our model two firms compete to develop a product and obtain a patent. Howe...
متن کاملذخیره در منابع من
با ذخیره ی این منبع در منابع من، دسترسی به آن را برای استفاده های بعدی آسان تر کنید
برای دانلود متن کامل این مقاله و بیش از 32 میلیون مقاله دیگر ابتدا ثبت نام کنید
ثبت ناماگر عضو سایت هستید لطفا وارد حساب کاربری خود شوید
ورودعنوان ژورنال:
- European Journal of Operational Research
دوره 223 شماره
صفحات -
تاریخ انتشار 2012