This paper considers a patent portfolio race where firms compete for complementary patents, called a patent thicket. When firms have an option to keep their innovation secret, this paper shows that there exists an equilibrium where firms` patent prope...
This paper considers a patent portfolio race where firms compete for complementary patents, called a patent thicket. When firms have an option to keep their innovation secret, this paper shows that there exists an equilibrium where firms` patent propensity is strictly between zero and one. In such an equilibrium, stronger patent protection reduces the firms` investment in innovation. Moreover, this result does not change even when a licensing contract is feasible.