Chu, Angus C. (2009): Effects of Patent Policy on Income and Consumption Inequality in an R&D-Growth Model.
Download (164kB) | Preview
What are the effects of strengthening patent protection on income and consumption inequality? To analyze this question, this paper develops a quality-ladder growth model with wealth heterogeneity and elastic labor supply. The model predicts that strengthening patent protection increases (a) economic growth by stimulating R&D and (b) income inequality by raising the return on assets. However, whether it increases consumption inequality depends on the elasticity of intertemporal substitution. Calibrating the model to US data shows that strengthening patent protection increases income inequality by more than consumption inequality, and this divergence between income and consumption inequality is consistent with the data.
|Item Type:||MPRA Paper|
|Original Title:||Effects of Patent Policy on Income and Consumption Inequality in an R&D-Growth Model|
|Keywords:||endogenous growth; heterogeneity; income inequality; patent policy|
|Subjects:||D - Microeconomics > D3 - Distribution > D31 - Personal Income, Wealth, and Their Distributions
O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models
O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital
|Depositing User:||Angus C. Chu|
|Date Deposited:||06. Jan 2009 06:02|
|Last Modified:||12. Feb 2013 22:19|
Acemoglu, D. and Akcigit, U. (2008). State dependent intellectual property rights policy. NBER Working Paper No. 12775.
Aghion, P. and Howitt, P. (1992). A model of growth through creative destruction. Econometrica, 60, 323-51.
Atkinson, A.B. (2000). The changing distribution of income: evidence and explanations. German Economic Review, 1, 3-18.
Atkinson, A.B. (2003). Income inequality in OECD countries: data and explanations. CESifo Economic Studies, 49, 479-513.
Bertola, G. (1993). Factor shares and savings in endogenous growth. American Economic Review, 83, 1184-98.
Bertola, G., Foellimi, R. and Zweimuller, J. (2006). Income distribution in macroeconomic models. Princeton University Press.
Blundell, R., Pistaferri, L. and Preston, I. (2008). Consumption inequality and partial insurance. American Economic Review, 98, 1887-921.
Budria-Rodriguez, S., Diaz-Gimenez, J., Quadrini, V. and
Rios-Rull, J. (2002). Updated facts on the U.S. distributions of earnings, income, and wealth. Federal Reserve Bank of Minneapolis Quarterly Review, 26, 2-35.
Caselli, F. and Ventura, J. (2000). A representative consumer theory of distribution. American Economic Review, 90, 909-26.
Chou, C. and Talmain, G. (1996). Redistribution and growth: Pareto improvements. Journal of Economic Growth, 1, 505-23.
Foellmi, R. and Zweimuller, J. (2006). Income distribution and demand-induced innovations. Review of Economic Studies, 73, 941-60.
Gallini, N.T. (2002). The economics of patents: lessons from recent U.S. patent reform. Journal of Economic Perspectives, 16, 131-54.
Garcia-Penalosa, C. and Turnovsky, S.J. (2006). Growth and income inequality: a canonical model. Economic Theory, 28, 25-49.
Ginarte, J.C. and Park, W.G. (1997). Determinants of patent rights: a cross-national study. Research Policy, 26, 283-301.
Grossman, G.M. and Helpman, E. (1991). Quality ladders in the theory of growth. Review of Economic Studies, 58, 43-61.
Hall, B.H., Jaffe, A.B. and Trajtenberg, M. (2002). The NBER patent citation data file: lessons, insights and methodological tools. in A.B. Jaffe and M. Trajtenberg, eds., Patents, Citations and Innovations: A Window on the Knowledge Economy, 403-59.
Jaffe, A.B. (2000). The U.S. patent system in transition: policy innovation and the innovation process. Research Policy, 29, 531-57.
Jaffe, A.B. and Lerner, J. (2004). Innovation and its discontents: how our broken system is endangering innovation and progress, and what to do about it. Princeton University Press.
Jones, C.I. and Williams, J.C. (1998). Measuring the social return to R&D. Quarterly Journal of Economics, 113, 1119-35.
Jones, C.I. and Williams, J.C. (2000). Too much of a good thing? The economics of investment in R&D. Journal of Economic Growth, 5, 65-85.
Krueger, D. and Perri, F. (2006). Does income inequality lead to consumption inequality? Evidence and theory. Review of Economic Studies, 73, 163-93.
Li, C.-W. (1998). Inequality and growth: a Schumpeterian perspective. manuscript.
Li, C.-W. (2001). On the polity implications of endogenous technological progress. Economic Journal, 111, C164-79.
O’Donoghue, T. and Zweimuller, J. (2004). Patents in a model of endogenous growth. Journal of Economic Growth, 9, 81-123.
Park, W.G. (2008). International patent protection: 1960-2005. Research Policy, 37, 761-6.
Poterba, J.M. (1998). The rate of return to corporate capital and factor shares: new estimates using revised national income accounts and capital stock data. Carnegie-Rochester Conference Series on Public Policy, 48, 211-246.
Reed, D. and Cancian, M. (2001). Sources of inequality: measuring the contributions of income sources to rising family income inequality. Review of Income and Wealth, 47, 321-333.
Shapiro, I. and Friedman, J. (2006). New, unnoticed CBO data show capital income has become much more concentrated at the top. Center on Budget and Policy Priorities, Jan 29, 2006.
Zweimuller, J. (2000). Schumpeterian entrepreneurs meet Engel’s law: the impact of inequality on innovation-driven growth. Journal of Economic Growth, 5, 185-206.
Available Versions of this Item
Effects of Patent Policy on Income and Consumption Inequality in an R&D-Growth Model. (deposited 26. Aug 2008 07:30)
- Effects of Patent Policy on Income and Consumption Inequality in an R&D-Growth Model. (deposited 06. Jan 2009 06:02) [Currently Displayed]