Process innovations, patent litigation and time effects

In this work we extend the model developed in (Aoki and Hu, 2003) in order to cover cost reduction innovations, instead of product innovations originally developed on that article. The results show that smaller innovations are more licensable. Regarding the time factors, infringers like faster innovation and patentees prefer bigger innovations and longer imitation periods. Under some suitable situations, litigation time could support innovation and discourage infringement. However the patent life has ambiguous effects and may promote infringement