Innovation, Fast Seconds, and Patent Policy 1 1. Innovative Entrepreneurs and " Fast Second " Entrants 2. a Big Fish, Little Fish Model of Innovation and Market Evolution
نویسنده
چکیده
We develop a model of innovation in which entrepreneurs develop a new (differentiated) product market that is subsequently exploited by a well-established firm that “stretches” its brand to enter the new market as a “fast second”. In this setting, there is a positive externality to the pioneering efforts of the initial entrants that may well increase with the number of such entrants. We develop a model that exhibits this externality and use it to analyze the effectiveness of patent policy— specifically patent breadth—in encouraging the socially optimal amount of initial entry.
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