This paper shows that when a product innovation is protected by both patents and trade secrets, under U.S. law the innovator can be induced to license a rival even if patent protection is very broad and there are no partially competitive older products. This opportunity may benefit society....

We present a simple model where patents are inferior to secrecy, meaning that when private returns from innovation under the two regimes are the same, society is better off if innovator chooses not to patent. In our model trade secret licensing is envisaged and inferiority of patents depends on...

A common argument against compulsory licensing of intellectual property maintains that it facilitates the entry of inefficient producers, which may reduce social welfare independently of any effects on R&D incentives. We study the issue in a model where the innovative firm, under the threat of...