Imitation, patent protection, and welfare

Newly developed technologies run the risk of being imitatedwhen patents are long and imitation cost is low. This papershows that the innovator has the incentive to postpone technologyadoption when imitation is a credible threat but imitation costis not below a certain threshold. The possibility of licensingeliminates or at least reduces the incentive for delayed technologyadoption. Further, this paper explains the advantages of a forwardlicensing contract versus a simple licensing contract in termsof profits and social welfare.