Comment on Gilbert and Newbery's "Preemptive patenting and the persistence of monopoly"

Stephen W. Salant

Expert InsightsPublished 1982

A recent article by Richard Gilbert and David Newbery advances the thesis that, even in the absence of market failures, the patent system provides incentives for a monopolist who is inefficient at R&D to outspend more efficient potential rivals so as to win the race to the patent office. In this paper the characteristics which the two authors attribute to the patent system are shown on the contrary to result from an implicit assumption that patent rights cannot be subsequently transferred. If such transactions are permitted, entrants who can develop technologies more efficiently than the incumbent always win the patent race, preemptive patenting never occurs, and while production is again monopolized, there is no more reason to expect that the incumbent will acquire the entrant's patent than that the entrant will acquire the incumbent's patent.

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Salant, Stephen W., Comment on Gilbert and Newbery's "Preemptive patenting and the persistence of monopoly". Santa Monica, CA: RAND Corporation, 1982. https://www.rand.org/pubs/papers/P6840.html.
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