An optimal patent policy in a dynamic model of innovation

Israel Luski, David Wettstein

Research output: Contribution to journalArticlepeer-review


We assess patent policies where R&D aims at higher quality and the firms engage in strategic behavior. The innovation realized in one period affects the cost of realizing innovations in subsequent periods. The two firms compete in prices, and only one can innovate in each period. We compare the optimal innovation pattern to the second best innovation pattern, involving strategic behavior. Both are superior to the innovation pattern realized in an unregulated market. The market performance can be improved through the introduction of patent protection, and we characterize an optimal protection policy in the form of novelty requirements.

Original languageEnglish
Pages (from-to)31-43
Number of pages13
JournalProblems and Perspectives in Management
Issue number1
StatePublished - 1 Jan 2004

ASJC Scopus subject areas

  • Business and International Management
  • General Business, Management and Accounting
  • Sociology and Political Science
  • Public Administration
  • Strategy and Management
  • Information Systems and Management
  • Law


Dive into the research topics of 'An optimal patent policy in a dynamic model of innovation'. Together they form a unique fingerprint.

Cite this