Incorporating Intellectual Property Issues into a Business Simulation©

Abstract

This paper presents a new simulation based upon a game design system developed by Teach (1985, 1986, & 1990). The creation and management of intellectual property (IP) plays a central role in this simulation. Firms research the potential of new products and then protect their newly discovered IP through the use of either patents or trade secrets. The firms then decide whether to (1) manufacture and sell this new product, (2) license the IP to a competitor and receive a front-end fee plus a royalty, or (3) sell the rights to the IP to a competitor. The selling or licensing of IP rights requires one-on-one negations between firms. The measure of success in the simulation is the profit maximization of the firm.