Seminar: Lars Persson, Research Institute of Industrial Economics, Stockholm.

Title: Commercialization by Sale and Entry: Innovation Ownership Policies.

Abstract:

An entrepreneur possessing an innovation face a choice of whether to commercialize the innovation herself, or to sell it ( licence it) to an incum-bent firm already active in an oligopolistic market. We show that when the innovation is more drastic, it is more likely that the innovation is commercialized through a sale to an incumbent, due to strategic product markets affecting sales price. We also show that an entry stimulating policy, despite leading to more innovation for entry, can be counterpro-ductive since entrepreneurs will then choose have an incentive to develop less drastic innovations. Finally, we show that stronger patent protection increases the incentive for innovation for sale relative to entry.