reward theory: patent - harvard university theory patent.pdf• by obtaining a patent, the innovator...
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![Page 1: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/1.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Reward Theory: Patent
William Fisher
![Page 2: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/2.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 3: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/3.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 4: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/4.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 5: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/5.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 6: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/6.jpg)
Who Are Your Customers?
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 7: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/7.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Daron Rahlves
![Page 8: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/8.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Sam
![Page 9: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/9.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Brandon
![Page 10: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/10.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
![Page 11: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/11.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Marginal Cost
![Page 12: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/12.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Marginal Cost
Willingness and ability to pay of consumer X
P(D)
D
![Page 13: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/13.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
P(S)
S
Marginal Cost
Willingness and ability to pay of consumer Y
P(D)
D
![Page 14: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/14.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
P(S)
S
Marginal Cost
Willingness and ability to pay of consumer Z
P(D)
D
P(B)
B
![Page 15: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/15.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
Aggregate Consumer Demand
P(D)
D
P(B)
B
![Page 16: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/16.jpg)
What will happen if I do not have IP protection?
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 17: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/17.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 18: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/18.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 19: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/19.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 20: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/20.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 21: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/21.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 22: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/22.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 23: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/23.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 24: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/24.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 25: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/25.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
![Page 26: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/26.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
P(D)
D
P(B)
B Q
In the absence of patent, copying and competition will drive the price down close to marginal cost
![Page 27: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/27.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Market for Knee Brace
$
Quantity
P(S)
S
Marginal Cost
In the absence of patent, copying and competition will drive the price down close to marginal cost
P(D)
D
P(B)
B
Resultant Consumer Surplus
Q
![Page 28: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/28.jpg)
• By obtaining a patent, the innovator can prevent this dynamic
• If there are no close substitutes for the invention, the patent gives the innovator market power
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 29: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/29.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Improved Knee Brace
![Page 30: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/30.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Improved Knee Brace
![Page 31: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/31.jpg)
• By obtaining a patent, the innovator can prevent this dynamic
• If there are no close substitutes for the invention, the patent gives the innovator market power
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 32: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/32.jpg)
• By obtaining a patent, the innovator can prevent this dynamic
• If there are no close substitutes for the invention, the patent gives the innovator market power
• He can then set a price without fear of corrosion through competition
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 33: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/33.jpg)
• By obtaining a patent, the innovator can prevent this dynamic
• If there are no close substitutes for the invention, the patent gives the innovator market power
• He can then set a price without fear of corrosion through competition
• Assume, for the moment, he charges all consumers the same price
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 34: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/34.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
In the absence of Price Discrimination
![Page 35: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/35.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
In the absence of Price Discrimination
![Page 36: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/36.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
In the absence of Price Discrimination
![Page 37: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/37.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
Revenues
In the absence of Price Discrimination
![Page 38: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/38.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
Costs
In the absence of Price Discrimination
![Page 39: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/39.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
Profits
In the absence of Price Discrimination
![Page 40: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/40.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
In the absence of Price Discrimination
![Page 41: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/41.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
In the absence of Price Discrimination
![Page 42: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/42.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
In the absence of Price Discrimination
![Page 43: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/43.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
Revenue loss
In the absence of Price Discrimination
![Page 44: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/44.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
Revenue loss
Revenue gain
In the absence of Price Discrimination
![Page 45: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/45.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
Profits
In the absence of Price Discrimination
![Page 46: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/46.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
r
In the absence of Price Discrimination
![Page 47: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/47.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
r
w
In the absence of Price Discrimination
![Page 48: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/48.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
r
w
Revenue loss
In the absence of Price Discrimination
![Page 49: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/49.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
r
w
Revenue loss
Revenue gain
In the absence of Price Discrimination
![Page 50: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/50.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
p
u
q
v
r
w
Profit
In the absence of Price Discrimination
![Page 51: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/51.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
O
A
I
In the absence of Price Discrimination
![Page 52: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/52.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
C G
H
Marginal Cost
Marginal Revenue
O
A
I
In the absence of Price Discrimination
![Page 53: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/53.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
B
C
D
E
F
G
H
Marginal Cost
Marginal Revenue
O
A
I
In the absence of Price Discrimination
![Page 54: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/54.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
B
C
D
E
F
G
H
Marginal Cost
Profit-maximizing output
Prof
it-m
axim
izin
g pr
ice
Marginal Revenue
O
A
I
In the absence of Price Discrimination
![Page 55: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/55.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
B
C
D
E
F
G
H
Marginal Cost
Profit-maximizing output
Prof
it-m
axim
izin
g pr
ice
Monopoly Profits
Marginal Revenue
O
A
I
In the absence of Price Discrimination
![Page 56: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/56.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 57: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/57.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
![Page 58: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/58.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 1: Profit-Maximizing Behavior by a Patentee
$
Quantity
B
C
D
E
F
G
H
Marginal Cost
Profit-maximizing output
Prof
it-m
axim
izin
g pr
ice
Monopoly Profits
Marginal Revenue
O
A
I
In the absence of Price Discrimination
![Page 59: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/59.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 2: Economic Effects of Profit-Maximizing Behavior by a Patentee
$
Quantity
B
C
D
E
F
G
H
Marginal Cost
Profit-maximizing output
Prof
it-m
axim
izin
g pr
ice
Monopoly Profits
O
A
I
Consumer Surplus
![Page 60: Reward Theory: Patent - Harvard University Theory Patent.pdf• By obtaining a patent, the innovator can prevent this dynamic • If there are no close substitutes for the invention,](https://reader035.vdocuments.mx/reader035/viewer/2022081607/5eba504b7174426489241ed6/html5/thumbnails/60.jpg)
© 2008, William Fisher. This work is licensed under the Creative Commons Attribution-NonCommercial-ShareAlike 2.5 License.
Figure 2: Economic Effects of Profit-Maximizing Behavior by a Patentee
$
Quantity
B
C
D
E
F
G
H
Marginal Cost
Profit-maximizing output
Prof
it-m
axim
izin
g pr
ice
Monopoly Profits
O
A
I
Consumer Surplus
Deadweight Loss (foregone consumer surplus)
E