Sooner or later? Inventive rivalry and welfare

An important branch of the literature on research and development expenditures has focused on the timing of innovation under different assumptions about the degree of inventive railway. This paper examines the timing decision under conditions of growing technological opportunities. Unlike earlier work, we explicitly treat social welfare in a second-best world where patent protection is used to spur innovation. We find that, given reasonable parameters, the orderings of private introduction times vis-á-vis the socially optimal time are ambiguous. We conclude that any welfare ranking would require a complete specification of all parameters (technical, behavioral and structural) surrounding each specific technological opportunity.