Acemoglu, Daron; Bimpikis, Kostas; Ozdaglar, Asuman - In: American Economic Journal: Microeconomics 3 (2011) 1, pp. 37-77
This paper studies a simple model of experimentation and innovation. Our analysis suggests that patents improve the allocation of resources by encouraging rapid experimentation and efficient ex post transfer of knowledge. Each firm receives a signal on the success probability of a project and...