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On the optimal mix of patent instruments

Chu, Angus C. and Furukawa, Yuichi (2010): On the optimal mix of patent instruments.

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Abstract

A special characteristic of the patent system is that it features multiple patent-policy levers that can be employed by policymakers. In this note, we develop an R&D-based growth model to analyze the optimal mix of patent instruments. Specifically, we consider (a) patent breadth and (b) the division of profit in research joint ventures. Our results can be summarized as follows. First, we analytically derive the optimal mix of patent breadth and the profit-division rule. Then, we calibrate the model to quantitatively evaluate the welfare gain from optimizing both patent instruments as compared to optimizing only one patent instrument. In summary, we find that the welfare gain can be quantitatively significant.

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