Incentives to Innovate with Complementary Inventions
نویسنده
چکیده
The paper introduces a model in which complementary monopoly inventors follow quantity-setting strategies and and engage in bilateral negotiation with licensees. The main result of the analysis is that non-cooperative equilibrium with quantity-setting inventors generates prices that correspond to the cooperative outcome. This di¤ers from Cournots classic result that noncooperative competition with price-setting generates prices that exceed the cooperative outcome. I further show that with endogenous R&D, quantity competition among complementary inventors generates more inventions, higherquality technology, and lower product prices than a multi-project monopoly inventor. The discussion considers policy implications of complementary in-
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