This paper analyzes the effect of forward patent protection in a two-stagerace when innovation is sequential. Free entry is allowed in each stage. A firmwhich is successful in innovation in the first stage competes with new firms inthe second stage. Under three patent regimes, this paper derives to comparethe equilibrium level of R&D investment not only by the industry level, but bythe firm level. The ST regime (Satckelberg competition) entails higher socialwelfare than the other patent regimes. This result supports the strong forwardprotection for the first-generation innovator as Green and Scotchmer(1995).