We study the problem of an inventor who brings to the market an innovation that can be legally imitated. Imitators may “enter” the market by imitating the innovation at a cost or by buying from the inventor the knowledge necessary to reproduce and use the invention. The possibility of...

We consider the problem of an inventor who discloses knowledge under the threat of a rival who may patent a competing idea. Disclosure diminishes the probability that the rival has of receiving a patent (legal externality) but it also decreases the rival’s marginal R&D cost (knowledge...