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Patent Races with a Sequence of Innovations

Reinganum, Jennifer F. (1982) Patent Races with a Sequence of Innovations. Social Science Working Paper, 426. California Institute of Technology , Pasadena, CA. (Unpublished)

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The theoretical literature on patent races has been an interesting and fast-evolving one, moving from largely heuristic discussion to quite rigorous analysis within the space of the past two decades. This literature has been characterized by a pattern of interesting results which are subsequently reversed under alternative behavioral and/or structural assumptions. This sensitivity of key results to mutually exclusive but perhaps equally plausible modeling assumptions has kept conclusions and policy recommendations in a constant state of revision. All of these papers have been concerned with a single innovation produced by a number of identical agents. This paper generalizes this literature in two important ways. First, we consider a market in which one firm is the current patent-holder the incumbent, while the remaining firms are non-incumbents; firms are entirely symmetric in every other sense. Second, we consider a sequence of innovations, so that success does not imply that the successful firm reaps monopoly profits forever after, but only until the next, better innovation is developed.

Item Type:Report or Paper (Working Paper)
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URLURL TypeDescription ItemPublished Version
Alternate Title:Innovation and Industry Evolution
Additional Information:I would like to thank Louis Wilde for helpful comments and discussion. The financial support of the National Science Foundation is gratefully acknowledged. Published as Reinganum, Jennifer F. "Innovation and industry evolution." The Quarterly Journal of Economics 100.1 (1985): 81-99.
Group:Social Science Working Papers
Funding AgencyGrant Number
Subject Keywords:Incumbents, Technological innovation, Nash equilibrium, Investment rates, Business innovation, Research and development, Economic competition, Games, Theater, Evolution
Series Name:Social Science Working Paper
Issue or Number:426
Record Number:CaltechAUTHORS:20171003-141523382
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Usage Policy:No commercial reproduction, distribution, display or performance rights in this work are provided.
ID Code:82003
Deposited By: Jacquelyn Bussone
Deposited On:04 Oct 2017 19:16
Last Modified:03 Oct 2019 18:49

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