Template-Type: ReDIF-Paper 1.0

Author-Name: Robin Kleer
Author-X-Name-First: Robin
Author-X-Name-Last: Kleer

Title: Acquisitions in a Patent Contest Model with Large and Small Firms
	
Abstract: Big companies and small innovation factories possess different advantages in a
patent contest. While large firms typically have a better access to product markets,
small firms often have a superior R&D efficiency. In this paper I model a patent
contest with asymmetric firms. In a pre-contest acquisition game large firms bid
sequentially for small firms to combine respective advantages. Sequential bidding
allows the first large firm to wait strategically and let the other firm acquire. For
low efficiencies this leads to an asymmetric market structure even though the
initial situation is symmetric. Furthermore, acquisitions increase the chances for a
successful innovation.
Length:  20 pages
Creation-Date:  2008-06
File-URL: http://www.bgpe.de/texte/DP/061_kleer.pdf
File-Format: Application/pdf
File-Function: First version, 2008
Number: 061
Classification-JEL: O31, L24, G34
Keywords: patent contest, sequential acquisitions
Handle: RePEc:bav:wpaper:061_kleer