Nash Equilibrium and Mechanism Design

Nash, mechanism design

Auctions and Efficiency

efficiency, allocation of resources, privatization

Roy Radner and Incentive Theory

Moral hazard, Incentive, Adverse Selection

Sequential Innovation, Patents, and Imitation

We argue that when discoveries are "sequential" (so that each successive invention builds in an essential way on its predecessors) patent protection is not as useful for encouraging innovation as in a static setting. Indeed, society and even inventors themselves may be better off without such protection. Furthermore, an inventor's prospective profit may actually be enhanced by competition and imitation. Our sequential model of innovation appears to explain evidence from a natural experiment in the software industry.