This paper investigates the effect of different patent regimes on R&D investment and social welfare in a duopoly market … with uncertain R&D process. We find that strong patent protection increases R&D investment of at least one firm but whether … both firms' R&D investment will be more under strong patent protection is ambiguous. While ex-ante welfare is more likely …

a model with endogenous number of innovatingfirms, we show that whether product patent increases R&D is ambiguous, and … depends onthe type of market demand and the cost of R&D. If the market size increases with numberof firms, product patent … of lower R&D under productpatent. If the market size does not increase with number of firms, product patent …

We challenge the common wisdom that patent protection (compared to no or weak patent protection) makes the consumers … patent protection may encourage horizontal merger and affect the consumers adversely by increasing product …-market concentration compared to the situation with patent protection. Hence, even if we ignore the innovation inducing role of patent …