Munich Personal RePEc Archive

The welfare cost of one-size-fit-all patent protection

Chu, Angus C. (2009): The welfare cost of one-size-fit-all patent protection.

WarningThere is a more recent version of this item available.
[img]
Preview
PDF
MPRA_paper_21401.pdf

Download (302Kb) | Preview

Abstract

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.

Available Versions of this Item

UB_LMU-Logo
MPRA is a RePEc service hosted by
the Munich University Library in Germany.