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Preemption games with private information

Hopenhayn, H.; Squintani, F.; (2004) Preemption games with private information. (ELSE Working Papers 108). ESRC Centre for Economic Learning and Social Evolution: London, UK. Green open access

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Abstract

Preemption games are widely used to model patent races, innovation adoption and market entry problems. A previously neglected feature of these problems is that the agents� states (e.g. R&D firms' �technological improvements) are kept secret and stochastically change over time. We fully characterize equilibrium in preemption games where private information evolves according to Poisson processes, and provide a strategic rationale for the common wisdom that �big things happen fast.� In the context of patent races we surprisingly find that strengthening patent rights need not increase innovation disclosure. Furthermore, we clarify a basic welfare trade off between duplication costs and preemption: the former likely take place in early stages of the race, and preemption in later stages.

Type: Working / discussion paper
Title: Preemption games with private information
Open access status: An open access version is available from UCL Discovery
Publisher version: http://else.econ.ucl.ac.uk/newweb/papers.php
Language: English
Keywords: JEL classification: C73, D82. Timing games, patent races, private information
UCL classification: UCL > Provost and Vice Provost Offices > UCL SLASH > Faculty of S&HS > Dept of Economics
URI: https://discovery.ucl.ac.uk/id/eprint/14575
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