Technology spillover and innovation

Abstract

Technology spillover has crucial effects on innovation investment. This article captures the mechanism the technology spillover that affects innovation with dynamic game theory approaches. First, both technology spillover and competition improve consumer surplus. Consumers benefit from technology spillover. Second, firm with high technology undertakes a loss from technology spillover, while opponents benefit from spillover. Finally, technology spillover reduces the patent price. Under fierce competition, the patent price is also reduced. This conclusion helps patent price in theory. The policy implication is to subsidise innovation in some fields.