Chu, Angus C. (2009): The welfare cost of one-size-fit-all patent protection.
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To analyze the welfare gain from allowing for differentiated patent protection across sectors, this study develops a two-sector quality-ladder growth model in which patent breadth is a policy variable and derives the optimal patent breadth under two policy regimes. We show that (i) the optimal uniform patent breadth is a weighted average of the optimal sector-specific patent breadth, and (ii) the optimal sector-specific patent breadth is larger in the sector that has a larger market size and more technological opportunities. To derive the optimal policy, we allow for an arbitrary path of patent breadth and derive the optimal path by solving a Stackelberg differential game. We find that the optimal path of patent breadth under each regime is stationary, time-consistent and subgame perfect. Finally, we perform a numerical investigation and find that even a moderate degree of asymmetry across sectors can generate a significant welfare cost of uniform patent protection.
|Item Type:||MPRA Paper|
|Original Title:||The welfare cost of one-size-fit-all patent protection|
|Keywords:||economic growth; R&D; uniform patent protection; time-consistent patent policy|
|Subjects:||O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O34 - Intellectual Property Rights
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives
O - Economic Development, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General
|Depositing User:||Angus C. Chu|
|Date Deposited:||16. Mar 2010 01:20|
|Last Modified:||21. Feb 2013 06:45|
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