Do scarce resource inputs promote or reduce patent values and innovation? A game theory approach

ABSTRACT

Both patent price and innovation play crucial roles in the patent market and this article studies patent values under capacity or resource constraints using a game theory approach. First, patent industrialization advances consumer surplus in all situations. Second, under a monopoly, there is an inverse U-shaped relationship between the patent value and the total amount of a resource. Third, under an oligopoly with nonbinding capacity constraints, the patent value decreases as the total amount of the resource increases. Finally, the overall relationship between the patent value and the total amount of the resource under an oligopoly also has an inverse U-shape.

KEYWORDS:

• Patent values
• capacity constraints
• resource inputs

JEL:

• L1

Acknowledgment

This work is partially supported by the National Social Science Foundation of China (23BJY005).

Disclosure statement

All authors declare that no conflict of interest exists.

Data availability statement

Data sharing is not applicable to this article as no datasets were generated or analyzed during the current study.

Notes

1 https://reports.shell.com/sustainability-report/2023/achieving-net-zero-emissions/driving-innovation.html

2 Under competitive market, Kim and Lee (2016) pointed out that researching firm may benefit more from no-exclusive licensing patents. Schmitz (2007) addressed both exclusive licensing and no-exclusive licensing, and argued that exclusive licensing strategies may earn higher profits.

3 (2) simplifies the model and it is interesting to extend general situation in the future.

4 http://www.tongzhou.gov.cn/tzqrmzf/wdzsk/content/ebb558ce-8d78-4c66-9508-6f13cc1bf155.html

5 We highlight that this article always assumes that both market size $A$ and the total resource $R$ are big enough.

6 Further, when market size $A$ and or the total resource $R$ is small, the above market structure does not hold and the above model may be modified to a great degree. This may be our further research issue.

Additional information

Funding

This work was supported by National Social Science Fund of China: [Grant Number 23BJY005].