Intellectual property, self-protection and innovation

This paper builds a model with self-protection and product differentiation parameters to study the problem whether the firms´ self-protection can substitute the intellectual property protection system. The main result is that the firms´ self-protection can substitute the intellectual property protection system to some extent. The firm´s self-protection could be improved with the reduction of intellectual property protection. While the level of self-protection achieves a very high standard, it will bring the adverse effect on innovation and production. On the other hand, the existence of product differentiation can reduce the level of self-protection. Therefore the firms´ self-protection measure is a reasonable supplement to the nation´s intellectual property protection.