Browsing by Subject "innovaationakannustimet"

Traditional economics theory argues that competitive markets are unable to enhance innovation incentives. This is based on the claim that it is not possible for an inventor to earn profit for his invention in the face of unlimited imitation. Traditional theory calls for intellectual property for innovators, such as patents, to guarantee effective innovation production. The economic safety provided by patents creates innovation incentives, enhancing research levels and product quality. However, the increasing popularity of patents combined with the current, extensive patenting systems can create economic inefficiencies. The monopolistic competition arising from patent-provided rights may weaken innovation incentives in small as well as quickly developing industries. In addition, derived high prices and legal barriers to entry granted by intellectual property can distort competition and may even suppress the patent holder’s innovation tactics. Traditional economic theory also fails to explain why firms may choose not to utilise formal intellectual property in favour of informal protection methods which hold high importance to firms, such as secrecy, high wages, and increasing production complexity. My thesis examines whether competitive markets are able to enhance innovation incentives, and if so, under what conditions. I will also aim to enlighten why firms may favour other protective measures for their inventions over patents. Henry and Ponce (2011) and Henry and Ruiz-Aliseda (2015) expand our understanding of these topics in the form of game theory. A key factor in our analysis is the assumption that free spillovers are non-existent. Instead, endogenous knowledge must be purchased. As a result, potential imitators prefer to wait for the cost of knowledge to decrease, and delay their market entry. Such a delay, and the possibility to participate in knowledge trading, secure positive rents for the inventor, which compensates his innovation costs. These results are achieved even in unfavourable circumstances, where competition is high or the inventor incurs additional costs to protect their invention by other means than patenting. In fact, in such circumstances, we expect the inventor’s profits to approach monopolistic profits. In conclusion, competitive markets attain efficiency and improved levels of social welfare, and therefore, innovation levels can persist in the market. These results are nonetheless sensitive in relation to the elasticity of demand. Market imperfections such as the indivisibility of an idea, moral hazard and adverse selection pose additional problems in the modelling within a competitive market. My thesis weighs in on the ever-crucial patenting debate: Is the modern, extensive patent system obsolete? High prices and risen monopolistic competition can lead to severe consequences on social welfare, and limit the exchange of knowledge. New innovation models in competitive markets and its ability to encourage innovation incentives pose an important argument against the expansion of the current patent system. These models also provide an explanation for the popularity of informal protection methods for innovations, emphasising the value of firm strategizing above legal procedures. Such patent criticism and empirical evidence could be utilised in the development of the current patent system.