Author: Lambertini Luca
Publisher: Springer Publishing Company
ISSN: 0931-8658
Source: Journal of Economics, Vol.90, Iss.2, 2007-03, pp. : 193-214
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Abstract
We consider a market for vertically differentiated goods where firms enter over time, after having developed innovations characterised by different quality levels. We show that patent height and length interact to determine the ultimate emergence of duopoly. In general, imposing quality improvements on later entrants entails the persistence of monopoly, while a duopoly equilibrium emerges when the second innovator is allowed to produce a sufficiently inferior quality and the patent protection granted to the first innovator is not too long-lasting.
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