SFB 303 Discussion Paper No. A-419

Author: Marjit, Sugata
Title: Cooperation in R and D - The Case of Patent Infringement Agreements
Abstract: This paper is an attempt to provide a strategic rationale behind patent infringement agreements (PIA). We interpret such agreements as yet another form of cooperation in a non-cooperative environment. If the infringement probability is not 'too' low, firms would have incentive to sign a PIA sacrificing the right to punish the offender. In a simple Cournot-Nash model with linear demand, we show that the infringement probability as low as near 1/5 could induce PIA.
JEL-Classification-Number: D45, L13
Creation-Date: March 1993, Revised September 1993
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