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Journal Article

Fragmented property rights and incentives for R&D

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Clark, D. J., & Konrad, K. A. (2008). Fragmented property rights and incentives for R&D. Management science, 54(5), 969-981. doi:dx.doi.org/10.1287/mnsc.1080.0873.

Cite as: https://hdl.handle.net/11858/00-001M-0000-0023-D45A-2
Where product innovation requires several complementary patents, fragmented property rights can limit firms' willingness to invest in R&D. We consider the research intensity in multiple simultaneous R&D contests and how it depends on whether firms already hold relevant patents as well as the availability of an option to invent around. A measure of technological uncertainty is also analyzed. The multiple patent product involves an important hold-up problem that can reduce the overall R&D effort. Invent-around options moderate this problem. We also analyze targeted equilibria in which the aim of R&D can be to hold up a rival.