Analysis On Barriers To Market Entry Based On Patent Institution

For a long time, the institution featuring the consistency between private return and social return and the promotion of innovation are guaranteed by exclusive monopoly of knowledge in patent institution. However, the patent institution has its own deficiency. Due to such exclusive monopoly, manufacturers which have patents or patents pending boast exclusive and monopolized rights over the knowledge (technology) during the period of patent protection, so that potential competitors are excluded from the industry, or patent holders charge excessively on potential competitors or produce at lower cost, thus obtaining monopoly profit. The existence of such entry barrier will affect the degree of market competition and further influence effective operation of market. At the time when China rigorously advocates the nation-vitalization strategy of self-innovation, the role of patent institution in stimulating technological innovation and encouraging technical proliferation is extensively accepted, while practices and theories often omit that the patent institution itself guarantees the realization of innovation by market monopoly, thus constituting entry barrier and affecting the improvement of industry innovation and the adjustment of industry structure. Therefore, in-depth knowledge of market entry barrier under the patent institution and influence over each industrial structure is a very important theoretical issue, which is critical to the improvement of institution at national level and decision-making at enterprise level.There are two difficulties in researching market entry barrier under the patent institution: one is that under the restriction of patent institution, market entry barrier is different from other structural entry barriers and strategic barrier, so that the way and scope of its influence are affected, which can explain the insufficiency of institutionatic analysis about such barrier; the second is that under the context of a institution how to measure the strength and scope of influence of entry barrier on China's industries is vital to the improvement of patent institution by governments and the selection of patent strategy by enterprises. Therefore, the article begins from the summary of theories about entry barrier and patent institution, focusing on the market phenomenon where manufacturers make use of legal institution to build barriers. Through analysis of three features namely strong exclusiveness, openness and timeliness of such barrier in Chapter III, the article summarizes that the monopoly formed by such barrier is a kind of short-term and open dynamic monopoly, where its influence of excluding potential competitors is actually expressed by three forms, especially by standard barrier form. Thus, market entry barrier under the patent institution neither a structural barrier nor a strategic barrier. It seems to be similar to the structural barrier caused by institutions such as license institution, but from the perspective of the mechanism of its role-playing, it seems more like a strategic entry barrier.Because of specialty of market entry barrier under the patent institution, the empirical analysis of the article, firstly, based on betterment of measures of entry barrier, gradually calculates the length of entry barriers among various industries in China, finding that most industries are in full competition, and some industries are entered excessively or subject to entry barriers set by governments. Then, whether those industries with entry barriers are affected by patent institution and those industries which seem to be full of competition and excessively entered can be free from market entry barrier under patent institution? The article rejects the data of industries under governmental regulation, further constructs panel model of the data in 9 years among 29 industries, concluding that: market entry barrier under patent institution exists indeed, and the barrier formed by patents granted is stronger than the one caused by patent application; (2) the patent application period and the publicity institution promote competition in an industry. When patent applications in an industry are mainly new type and appearance design, the entry barrier of such industry will be reduced, where enterprise entries will increase after the patent application period; (3) the industries which are excessively entered are not caused by imperfection of the patent institution.With regard to suggestions, the article begins from two perspectives. First on public policy, while affirming the stable operation of China's patent institution, it tries to focus on properties of an industry and current status of China's industries, raising suggestions on betterment of the patent institution, formulation of national patent strategy for resisting international patent monopoly and booming patent trading market. From the perspective of enterprises'behavior, enterprises are encouraged to focus on patent strategy, actively participate in international patent competition so as to enhance industrial technical capability and drive the improvement of overall innovation capacity.