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R & D competition and patent values
Pu-yan NIE, Hong-xing WEN
Corresponding author
pynie2013@163.com

Corresponding author.
, Chan WANG
School of Economics, Institute of Guangdong High-quality Development, National Economics Research Center, Guangdong University of Finance &Economics (GDUFE), Guangzhou, 510320, China
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    "textoCompleto" => "<span class="elsevierStyleSections"><span id="sec0001" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0003">Introduction</span><p id="para0004" class="elsevierStylePara elsevierViewall">Realizing patent or intellectual property &#40;IP&#41; is extremely important to promote the economy worldwide&#46; To attain certain targets&#44; firms have to compete to launch research and development &#40;R &#38; D&#41; activities&#46; For example&#44; several firms compete to develop a coronavirus disease 2019 &#40;COVID-19&#41; vaccine to cope with the spread of COVID-19 &#40;<a class="elsevierStyleCrossRef" href="#bib0009">Graham&#44; 2020</a>&#59; <a class="elsevierStyleCrossRef" href="#bib0011">Heaton&#44; 2020</a>&#59; <a class="elsevierStyleCrossRef" href="#bib0014">Le et&#44; al&#46;&#44; 2020</a>&#41;&#46; Since April 8&#44; 2021&#44; 155 COVID-19 vaccines have been developed worldwide&#8212;including <a href="https://clinicaltrials.gov/ct2/show/NCT04283461">mRNA-1273</a>&#160;of Moderna&#44;<a href="https://clinicaltrials.gov/ct2/show/NCT04313127">Ad5-nCoV</a>of CanSino Biologicals&#44;<a href="http://ir.inovio.com/news-and-media/news/press-release-details/2020/INOVIO-Initiates-Phase-1-Clinical-Trial-Of-Its-COVID-19-Vaccine-and-Plans-First-Dose-Today/default.aspx">INO-4800</a>&#160;of Inovio&#44; and<a href="https://clinicaltrials.gov/ct2/show/NCT04276896">LV-SMENP-DC</a> and <a href="https://clinicaltrials.gov/ct2/show/NCT04299724">pathogen-specific aAPC</a> of Shenzhen Geno-Immune Medical Institute &#40;<a class="elsevierStyleCrossRef" href="#bib0014">Le et al&#46;&#44; 2020</a>&#41;&#46; To date&#44; only nine COVID-19 vaccines are permitted for use&#46; Efficient COVID-19 vaccines are now in production owing to R&#38;D competition&#46; &#40;<a class="elsevierStyleCrossRef" href="#bib0016">Minin et al&#46;&#44; 2021</a>&#41;&#46;</p><p id="para0005" class="elsevierStylePara elsevierViewall">According to the earlier example&#44; the R&#38;D competition stimulated the progress of COVID-19 vaccines&#46; Moreover&#44; according to data obtained from the China National Intellectual Property Administration <a href="https://www.cnipa.gov.cn/module/download/down.jsp?i_ID=176539&amp;colID=88">&#40;cnipa&#46;gov&#46;cn&#41;</a>&#44; launched on July 13&#44; 2022&#44; the rewards of patents are 4&#46;5 times of investments in 2021 and 4&#46;4 times in 2020&#46;Thus&#44; capturing R&#38;D competition&#39;s effects is important&#46; Based on the above background&#44; this study addresses R&#38;D competition affecting patent prices using game theory approaches&#46; Moreover&#44; patents are closely related to technological levels&#46; The technology level generally measures the degree of technological expertise and advances&#46; Therefore&#44; production efficiency and cost are two important symbols of technology levels&#46; This study refers to the technology level with the costs incurred on production&#46; Higher technology-level patents yield lower marginal production costs&#46;</p><p id="para0006" class="elsevierStylePara elsevierViewall">This study&#39;s contributions lie in both its theories and applications&#46; This study establishes a theory on R &#38; D competition-related patent prices&#46; Low-level patents harm consumer surplus&#44; presenting both the effects of technology spillover on R&#38;D and conditions for technology spillover to improve &#40;or reduce&#41; R &#38; D&#46; Further&#44; it elucidates cooperative R &#38; D mechanisms and allocation benefits&#46;</p><p id="para0007" class="elsevierStylePara elsevierViewall">Policy implications have been proposed for applications&#46; The government should identify technology levels corresponding to patents and reject patents with low technology levels&#46; Further&#44; technology spillover impacts R&#38;D&#44; and IP protection should consider the situation to promote R &#38; D&#46; Moreover&#44; cooperative R &#38; D should be encouraged&#46;</p><p id="para0008" class="elsevierStylePara elsevierViewall">The remainder of this paper is organized as follows&#46; Section 2 reviews the literature on patent values and stresses the importance of the topic&#46; Section 3 establishes a model of patent values for the two research firms&#46; Subsequently&#44; Section 4 analyzes and discusses the model&#46; Finally&#44; Section 5 concludes the paper&#46;</p></span><span id="sec0002" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0004">Literature review</span><p id="para0009" class="elsevierStylePara elsevierViewall">Since the pioneering work of <a class="elsevierStyleCrossRef" href="#bib0003">Arrow &#40;1962&#41;</a>&#44; R&#38;D has been conducted by scholars and society worldwide&#46; <a class="elsevierStyleCrossRef" href="#bib0001">Acemoglu et al&#46; &#40;2018&#41;</a> argued that innovation is the basis of economic growth&#44; whereas <a class="elsevierStyleCrossRef" href="#bib0002">Aghion and Jaravel &#40;2015&#41;</a> discussed that technological innovation and spillover stimulatesocietal progress&#46; <a class="elsevierStyleCrossRef" href="#bib0012">Kogan et al&#46; &#40;2017&#41;</a> found that technological innovation improves resource allocation and has yielded economic growth in recent years&#46; <a class="elsevierStyleCrossRef" href="#bib0017">Nie and Yang &#40;2020&#41;</a> argued that cost-reduction innovation promotes consumer surplus&#46; The importance of innovation indicatesthat patents are needed to encourage innovation&#46;</p><p id="para0010" class="elsevierStylePara elsevierViewall">Patent values are important because they are crucial in patent industrialization&#46; For example&#44; <a class="elsevierStyleCrossRef" href="#bib0006">Cockburn et al&#46; &#40;2016&#41;</a> found that patents globally affect new drug diffusion&#46; <a class="elsevierStyleCrossRef" href="#bib0022">Quintino et al&#46; &#40;2021&#41;</a> found that intellectual property assets significantly affect innovation efficiency&#46; <a class="elsevierStyleCrossRef" href="#bib0026">Taehyuk and Ilwon &#40;2021&#41;</a> highlighted that patents yield first-mover advantages for firms in the entire market&#46; <a class="elsevierStyleCrossRef" href="#bib0023">Ribeiro and Shapira &#40;2020&#41;</a> identified differences in patents between public and private firms and demonstrated that private firms benefit more from patents&#46; Based on this&#44; <a class="elsevierStyleCrossRef" href="#bib0008">Fan et al&#46; &#40;2018&#41;</a> proposed optimal patents under incomplete information in theory&#46;</p><p id="para0011" class="elsevierStylePara elsevierViewall">Research on patent values has highlighted various factors affecting patent prices&#46; For instance&#44; <a class="elsevierStyleCrossRef" href="#bib0018">Nie&#44; Chen and Wang &#40;2021&#41;</a> discussed patent prices under oligopoly competition and proved that weaker firms exhibit a stronger intention to buy patents to pursue advantageous firms&#46; <a class="elsevierStyleCrossRef" href="#bib0005">Chen et al&#46; &#40;2022&#41;</a> argued that firms earn from the bundling sale pattern of patents if the two patents are closely related under Cournot and Stackelberg competition&#46; <a class="elsevierStyleCrossRef" href="#bib0021">Nie&#44; Wang and Wen &#40;2023&#41;</a> argued that technology standards promote patent values&#46; <a class="elsevierStyleCrossRef" href="#bib0024">Sen and Stamatopoulos &#40;2019&#41;</a> proved that price-decreasing taxes decrease patent values&#46; <a class="elsevierStyleCrossRef" href="#bib0019">Nie&#44; Wang and Wen &#40;2022&#41;</a> argued that technology spillovers reduce patent prices&#46; Interestingly&#44; based on the human genome&#44; <a class="elsevierStyleCrossRef" href="#bib0028">Williams &#40;2013&#41;</a> addressed how research tools on patents harm innovation and opposed intellectual property protection on research tools&#46; Recently&#44; under incomplete information&#44; <a class="elsevierStyleCrossRef" href="#bib0025">Song and Zhao &#40;2021&#41;</a> found that strategic disclosure of intellectual property may stimulate innovation and suggested the exact IP protection to promote innovation&#46; <a class="elsevierStyleCrossRef" href="#bib0007">Donduran and &#220;nveren &#40;2021&#41;</a> discussed cooperative innovation or cooperative patents and found that competitive R&#38;D yields overinvestment&#46;</p><p id="para0012" class="elsevierStylePara elsevierViewall">We address some policy implications based on the corresponding theory and prior empirical research&#46; <a class="elsevierStyleCrossRef" href="#bib0015">Lim &#40;1998&#41;</a> argued that patent policy plays an important role in influencing R&#38;D&#46; <a class="elsevierStyleCrossRef" href="#bib0029">Zeng et al&#46; &#40;2014&#41;</a> proposed price regulation to promote innovation&#46; <a class="elsevierStyleCrossRef" href="#bib0013">Kwon &#40;2021&#41;</a> proposed a patent policy to identify weak patents to strengthen patent industrialization and maintain high-level innovation&#46;</p><p id="para0013" class="elsevierStylePara elsevierViewall">Although competition affecting patent values has been discussed previously&#44; no studies have considered patent values under R&#38;D competition&#44; which signifies that a potent entrant of a patent invariably exists&#44; and this potent entrant impacts the research firm to price patents&#46; This study aims to fill this research gap by capturing the patent values under R &#38; D competition&#46; Moreover&#44; the duopoly competition model is introduced into R &#38; D competition&#46; In this model&#44; the technology level is related to the marginal costs incurred on production&#46; Industrial organizations have been introduced in the R &#38; D field&#46; This enriches the R &#38; D model and analysis framework&#46;</p></span><span id="sec0003" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0005">Model establishment</span><p id="para0014" class="elsevierStylePara elsevierViewall">The model is established with a patent and two research firms in this industry&#46; <a class="elsevierStyleCrossRef" href="#bib0004">Che&#44; Iossa and Rey &#40;2021&#41;</a> assumed that research firms exist in the industry&#46; We assume Nproduction firms in this industry with marginal costs ci&#62;0&#44;i&#61;1&#44;2&#44;&#8943;&#44;N&#46; Without loss of generality&#44; we assume that 0&#60;c1&#8804;c2&#8804;&#8943;&#8804;cN&#46; The firms&#8217; corresponding outputs are qi&#44;i&#61;1&#44;2&#44;&#8943;&#44;N&#46;Moreover&#44; all firms&#8217; production is identical for all users&#46; The costs incurred on production are Ci&#40;qi&#41;&#61;ciqi&#46; The final goods&#8217; price is p&#44; and the inverse demand function is expressed as follows&#58;<elsevierMultimedia ident="eqn0001"></elsevierMultimedia></p><p id="para0015" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Producers&#46;</span> Without this patent&#44; firms&#8217; profits are stated as follows&#58;<elsevierMultimedia ident="eqn0002"></elsevierMultimedia></p><p id="para0016" class="elsevierStylePara elsevierViewall">This patent is priced as pp&#62;0&#44; and the costs incurred by this patent arecp&#62;0&#46; Moreover&#44; based on the exclusion rules&#44; we further assume that this patent is sold to a unique production firm&#46; We assume that firm K buys this patent and that the corresponding profit function is<elsevierMultimedia ident="eqn0003"></elsevierMultimedia><elsevierMultimedia ident="eqn0004"></elsevierMultimedia></p><p id="para0017" class="elsevierStylePara elsevierViewall">Moreover&#44; the market size is sufficiently large&#44; and this study invariably assumes that A&#62;&#62;maxj&#61;1&#44;2&#44;&#8943;&#44;N&#123;cj&#125;&#46; The market size is exceedingly larger than the marginal costs incurred on production&#44; which guarantees all firms&#8217; production&#46;</p><p id="para0018" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Research firms&#46;</span> Two research firms in this industry that compete in R&#38;D are introduced and denoted as &#123;A&#44;B&#125;&#46; The two research firms launched a patent competition&#44; and one achieved a patent&#46; We assume that the two research firms spend I&#61;&#40;IA&#44;IB&#41; in R&#38;D&#46; The probability of obtaining a patent along with the production costs c&#175; is<elsevierMultimedia ident="eqn0005"></elsevierMultimedia></p><p id="para0019" class="elsevierStylePara elsevierViewall">In <a class="elsevierStyleCrossRef" href="#eqn0005">Eq&#46; &#40;5&#41;</a>&#44; &#947;&#8712;&#91;0&#44;1&#93; indicates the degree of technology spillover&#46; hj&#40;&#8226;&#41;&#44;j&#8712;&#123;A&#44;B&#125; satisfies hj&#40;0&#41;&#61;0&#44;j&#8712;&#123;A&#44;B&#125; and is concave&#59; that is&#44; dhj&#40;x&#41;dx&#8805;0 and d2hj&#40;x&#41;dx2&#60;0&#46;The assumption regarding this patent&#44; along with the production costs c&#175;&#44; is to simplify the model&#44; and it is easy to extend the general situation&#46;</p><p id="para0020" class="elsevierStylePara elsevierViewall">The timing of game theory is as follows&#58; In the first stage&#44; two research firms compete in R &#38; D&#44; and a research firm owns a patent and prices to production firms&#46; In the second stage&#44; a production firm buys this patent&#44; and no firms buy it&#46; In the final stage&#44; firms compete in terms of quantity&#46;</p></span><span id="sec0004" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0006">Discussion</span><p id="para0021" class="elsevierStylePara elsevierViewall">Backward induction is adopted to discuss the above model&#46; The third stage is addressed&#44; the second stage is discussed&#44; and finally&#44; the first stage is analyzed&#46;</p><span id="sec0005" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0007">The third stage</span><p id="para0022" class="elsevierStylePara elsevierViewall">The third stage is discussed in two cases&#46; One is that no firm buys this patent&#44; and the other is that firm K buys this patent&#46;</p><span id="sec0006" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0008">Case 1&#46; no firm buys this patent</span><p id="para0023" class="elsevierStylePara elsevierViewall">Without a patent&#44; this situation constitutes classical Cournot competition&#46; Equilibrium is calculated using &#40;2&#41;&#46; The profit functions are all concave&#44; and the equilibrium is determined by the first-order optimal conditions as follows&#58;<elsevierMultimedia ident="eqn0006"></elsevierMultimedia></p><p id="para0024" class="elsevierStylePara elsevierViewall">The equilibrium is<elsevierMultimedia ident="eqn0007"></elsevierMultimedia></p><p id="para0025" class="elsevierStylePara elsevierViewall">The assumption of A&#62;&#62;maxj&#61;1&#44;2&#44;&#8943;&#44;N&#123;cj&#125; implies that each output is positive&#46; Moreover&#44; the corresponding price and profits are represented<elsevierMultimedia ident="eqn0008"></elsevierMultimedia><elsevierMultimedia ident="eqn0009"></elsevierMultimedia></p></span><span id="sec0007" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0009">Case 2&#46; firm K buys this patent</span><p id="para0026" class="elsevierStylePara elsevierViewall">In this case&#44; equilibrium is achieved using <a class="elsevierStyleCrossRef" href="#eqn0003">Eq&#46; &#40;3&#41;</a>&#46; Like case 1&#44; the equilibrium is outlined as follows&#58;<elsevierMultimedia ident="eqn0010"></elsevierMultimedia></p><p id="para0027" class="elsevierStylePara elsevierViewall">The corresponding price and profits are<elsevierMultimedia ident="eqn0011"></elsevierMultimedia><elsevierMultimedia ident="eqn0012"></elsevierMultimedia></p><p id="para0028" class="elsevierStylePara elsevierViewall">Based on the above equilibrium&#44; we obtain the following conclusion&#58;</p><p id="para0029" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Proposition 1</span> Patent realization promotes total output or consumer surplus under c&#175;&#8804;cK&#46; Otherwise&#44; the consumer surplus undergoes a loss owing to patent industrialization&#46;</p><p id="para0030" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Proof&#46;</span> See Appendix&#46; &#9642;</p><p id="para0031" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Remarks&#58;</span> Condition c&#175;&#62;cKindicates that the technology level with patent realization is higher than in the initial stage&#46; In this situation&#44; patent industrialization promotes output while reducing the price of final goods&#46; Thus&#44; the consumer surplus is correspondingly improved&#46; Otherwise&#44; the technology is extremely low&#44; and this industry suffers a loss because of the introduction of patents&#46; The policy implies encouraging high-value patents or technology threshold values while preventing low-technology patents&#46; A restriction on the technology level is suggested for the government to improve consumer surplus&#46; Patent applications should focus on technology levels&#46;</p></span></span><span id="sec0008" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0010">Second stage</span><p id="para0032" class="elsevierStylePara elsevierViewall">At this stage&#44; firm Kdetermines whether to buy this patent&#46; This firm buys the patent if and only if the following principles apply for a profit-incentive firm&#58;<elsevierMultimedia ident="eqn0013"></elsevierMultimedia></p><p id="para0033" class="elsevierStylePara elsevierViewall">The above inequality implies that the firm benefits from this patent&#46; We re-write <a class="elsevierStyleCrossRef" href="#eqn0013">Eq&#46; &#40;13&#41;</a> as follows&#58;<elsevierMultimedia ident="eqn0014"></elsevierMultimedia>We denote V&#42;&#61;N&#40;cK&#8722;c&#175;&#41;N&#43;1&#40;qK2&#44;&#42;&#43;qK1&#44;&#42;&#41;by the threshold value for a firm to buy this patent&#46; For the above threshold value&#44; the following result holds&#58;</p><p id="para0034" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Proposition 2</span> Underc&#175;&#8804;cK&#44; the patent price&#39;s threshold value increases with the technology level and decreases with the competition&#46;</p><p id="para0035" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Proof&#46;</span> See Appendix&#46; &#9642;</p><p id="para0036" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Remarks&#58;</span> This proposition illustrates the relationship between the technology level and threshold values&#46; Higher technology levels imply lower expected costs&#44; and the threshold values are correspondingly promoted&#46;</p><p id="para0037" class="elsevierStylePara elsevierViewall">The relationship between competition and innovation has long been debated&#46; <a class="elsevierStyleCrossRef" href="#bib0003">Arrow &#40;1962&#41;</a> proposed that competition promotes innovation&#46; <a class="elsevierStyleCrossRef" href="#bib0010">Gilbert and Newbery &#40;1982&#41;</a> opposed Arrow&#39;s assumptions and demonstrated that monopolists are more incentivized to launch innovation&#46; The above conclusion also supports the important idea of <a class="elsevierStyleCrossRef" href="#bib0010">Gilbert and Newbery &#40;1982&#41;</a> in theory from another angle&#46;</p></span><span id="sec0009" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0011">The first stage</span><p id="para0038" class="elsevierStylePara elsevierViewall">This patent is sold if and only if the following conditions are fulfilled&#58;<elsevierMultimedia ident="eqn0015"></elsevierMultimedia></p><p id="para0039" class="elsevierStylePara elsevierViewall">From <a class="elsevierStyleCrossRef" href="#eqn0014">Eq&#46; &#40;14&#41;</a>&#44; this research firm benefits from this R&#38;D&#59; otherwise&#44;pp&#62;V&#42;suggests that the production firm has no intention to buy this patent because the price is extremely high&#46; cp&#62;ppindicates that the research firm incurs high costs&#44; and the trade between the research firm and production firm fails&#46; When <a class="elsevierStyleCrossRef" href="#eqn0015">Eq&#46; &#40;15&#41;</a> is not satisfied&#44; the government may subsidize the research firm or production firm to advance R&#38;D and patent industrialization &#40;<a class="elsevierStyleCrossRef" href="#bib0020">Nie et al&#46;&#44; 2020</a>&#59; <a class="elsevierStyleCrossRef" href="#bib0004">Che&#44; Iossa &#38; Rey&#44; 2021</a>&#41;&#46; For the research firm&#44; the expected earnings are prjpp&#46; The participation condition is as follows&#58;<elsevierMultimedia ident="eqn0016"></elsevierMultimedia>Otherwise&#44; the firm quits R&#38;D to avoid undertaking losses&#46; <a class="elsevierStyleCrossRef" href="#eqn0016">Eq&#46; &#40;16&#41;</a> can be restated as follows&#58;<elsevierMultimedia ident="eqn0017"></elsevierMultimedia>In &#40;17&#41;&#44; &#8722;j&#8712;&#123;A&#44;B&#125;&#44;&#8722;j&#8800;j&#46; Considering the patent values&#44; we obtain the following conclusion&#58;</p><p id="para0040" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Proposition 3</span> High technology spillover levels reduce innovative investment underexp&#40;&#8722;hj&#40;Ij&#43;&#947;I&#8722;j&#41;&#41;pp&#8706;hj&#8706;Ij&#62;1&#46; Otherwise&#44; technology spillovers promote innovative investments&#46;</p><p id="para0041" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Proof&#46;</span> See Appendix&#46; &#9642;</p><p id="para0042" class="elsevierStylePara elsevierViewall"><span class="elsevierStyleBold">Remarks</span>&#58; Under high technology spillover and exp&#40;&#8722;hj&#40;Ij&#43;&#947;I&#8722;j&#41;&#41;pp&#8706;hj&#8706;Ij&#62;1&#44; this R&#38;D exhibits a high probability of success&#44; and firms reduce RR &#38; D because all firms benefit from the opponents&#8217; R &#38; D&#46; Thus&#44; high technology spillover yields a free-rider phenomenon&#46; The policy implication is the launch of copyright protection to reduce technology spillovers for highly potential R &#38; D&#46; Thus&#44; firms tend to invest in R&#38;D&#46;</p><p id="para0043" class="elsevierStylePara elsevierViewall">Fromexp&#40;&#8722;hj&#40;Ij&#43;&#947;I&#8722;j&#41;&#41;pp&#8706;hj&#8706;Ij&#60;1&#44; R &#38; D faces low patent prices and a low probability of success&#44; and technology spillover encourages R&#38;D investment&#46; The corresponding policy implication is encouraging technology spillover because technology spillover stimulates innovation&#46;</p><p id="para0044" class="elsevierStylePara elsevierViewall">Otherwise under exp&#40;&#8722;hj&#40;Ij&#43;&#947;I&#8722;j&#41;&#41;pp&#8706;hj&#8706;Ij&#8805;1&#44; technology spillover deters innovation&#44; and the policy implication is the launch of strict patent protection to prevent technology spillover&#46; Thus&#44; R &#38; D is maintained&#46;</p><p id="para0045" class="elsevierStylePara elsevierViewall">In summary&#44; the policy implication is that optimal copyright protection depends on innovation properties&#46; To launch optimal policies&#44; patent properties and the market should be highlighted carefully&#46;</p><p id="para0046" class="elsevierStylePara elsevierViewall">We further discuss a symmetric situation wherein hA&#61;hBoccurs&#46; Moreover&#44; cooperative R &#38; D has also been addressed &#40;<a class="elsevierStyleCrossRef" href="#bib0027">Wang &#38;&#44; Nie&#44;2021</a>&#41;&#46; Firms cooperatively innovate if and only if the following conditions hold&#46;<elsevierMultimedia ident="eqn0018"></elsevierMultimedia>We assume that two research firms launch R &#38; D as &#40;IA&#42;&#44;3&#44;IB&#42;&#44;3&#41;&#46; This cooperative R&#38;D&#39;s earnings are in pp&#8722;IA&#42;&#44;3&#8722;IB&#42;&#44;3&#46; These extra earnings&#8217; allocation is&#58;<elsevierMultimedia ident="eqn0019"></elsevierMultimedia></p><p id="para0047" class="elsevierStylePara elsevierViewall">In summary&#44; because of technology spillover&#44; firms underinvest in R&#38;D&#46; A cooperative R&#38;D mechanism is proposed&#44; and allocation is suggested based on the investment&#46;</p></span></span><span id="sec0010" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0012">Concluding remarks</span><p id="para0048" class="elsevierStylePara elsevierViewall">This study focuses on R&#38;D&#39;s effects on patent value&#46; Conversely&#44; cost-reduction patent values increase with the technology level and decrease with the competition&#46; By contrast&#44; technology spillover may stimulate or deter innovation depending on R&#38;D&#39;s properties&#46; Further&#44; cooperative R &#38; D and the allocation mechanism are proposed&#46;</p><p id="para0049" class="elsevierStylePara elsevierViewall">Based on these results&#44; we suggest some policy implications&#46; First&#44; the government should identify patents with a high technology level because patents with low technology negatively impact social welfare&#46; Second&#44; IP protection should consider the R &#38; D process and patent values to promote innovation&#46; Proposition 3 supports the condition of protecting the IP to avoid technology spillover&#46; Finally&#44; cooperative R&#38;D should be encouraged to improve the likelihood of success&#46;</p><p id="para0050" class="elsevierStylePara elsevierViewall">This study&#39;s conclusions will be useful in management&#46; Firms should seek patents with a high technology level because they promote social welfare&#46; Low technology patents may damage the market and reduce social welfare&#46; Therefore&#44; firms need to select patents with a high technology level&#46;</p><p id="para0051" class="elsevierStylePara elsevierViewall">Considering the above analysis&#44; issues for further research are elucidated&#46; To simplify the model&#44; this study assumes that the technology level corresponding to the patent is fixed&#46; Extending this study to the general situation wherein the technology level depends on R &#38; D can be interesting&#46; Moreover&#44; various government strategies can be adopted to support R &#38; D&#46; Combining government policies and elucidating this aspect in detail would be interesting&#46;</p><span id="sec0011" class="elsevierStyleSection elsevierViewall"><span class="elsevierStyleSectionTitle" id="cesectitle0013">Data availability</span><p id="para0052" class="elsevierStylePara elsevierViewall">Data sharing is not applicable to this article as no datasets were generated or analyzed during the current study&#46;</p></span></span></span>"
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                  "titulo" => "Case 2&#46; firm K buys this patent"
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    "Biografia" => array:3 [
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        "biografia" => "<p id="spara002" class="elsevierStyleSimplePara elsevierViewall"><span class="elsevierStyleBold">Pu-yan Nie</span> was born in Hunan of China&#46; He received the PhD degree from Chinese Academy of Sciences in 2003&#46; He has been with Guangdong University of Finance &#38; Economics&#44; Guangzhou&#44; China&#44; where he is presently a professor&#46; His-interest currently lies in the field of game theory and industrial economics&#46;</p>"
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        "biografia" => "<p id="spara003" class="elsevierStyleSimplePara elsevierViewall"><span class="elsevierStyleBold">Hong-xing WEN</span> received the PhD degree from China Agricultural University in 2019&#46; He has been with Guangdong University of Finance &#38; Economics&#44; Guangzhou&#44; China&#44; where he is presently an associated professor&#46; His-interest currently lies in the field of development economics and industrial economics&#46;</p>"
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        "biografia" => "<p id="spara004" class="elsevierStyleSimplePara elsevierViewall"><span class="elsevierStyleBold">Chan Wang</span> received the PhD degree from Jinan University in 2017&#46; She has been with Guangdong University of Finance &#38; Economics&#44; Guangzhou&#44; China&#44; where she is presently a full professor&#46; Her interest currently lies in the field of game theory and industrial economics&#46;</p>"
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        "titulo" => "Abstract"
        "resumen" => "<span id="abss0001" class="elsevierStyleSection elsevierViewall"><p id="spara001" class="elsevierStyleSimplePara elsevierViewall">Research and development &#40;R &#38; D&#41; competition is standard&#44; and it heavily affects patent values&#46; This study captures R&#38;D competition&#39;s effects on patent values using game-theory approaches&#46; Cost-reduction patent values increase with technology level and decrease with the competition&#46; Technology spillover&#39;s impact on innovation depends on R &#38; D&#39;s properties&#46; This study elucidates cooperative R &#38; D and the allocation mechanism&#44; and also develops the theory of cooperative innovation&#46;</p></span>"
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                "apendice" => "<p id="para0053" class="elsevierStylePara elsevierViewall">From <a class="elsevierStyleCrossRef" href="#eqn0007">Eqs&#46; &#40;7&#41;</a> and &#40;<a class="elsevierStyleCrossRef" href="#eqn0011">11</a>&#41;&#44; where c&#175;&#8804;cK&#44; we obtain<elsevierMultimedia ident="ueqn0020"></elsevierMultimedia>Therefore&#44; c&#175;&#8804;cKindicates that patent realization promotes total output or consumer surplus&#46; Otherwise&#44; we obtainc&#175;&#62;cK<elsevierMultimedia ident="ueqn0021"></elsevierMultimedia>Thus&#44; patent realization reduces the total output or consumer surplus&#46;</p> <p id="para0054" class="elsevierStylePara elsevierViewall">The relevant conclusions are achieved&#44; and the proof is complete&#46; &#9642;</p>"
                "titulo" => "Proof of proposition 1"
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