Chu, Angus C. (2009): The welfare cost of one-size-fit-all patent protection.
Download (309kB) | Preview
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, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital
O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives
O - Economic Development, Innovation, 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:||28 Oct 2016 08:55|
Acemoglu, D., and Akcigit, U., 2009. State-dependent intellectual property rights policy. manuscript.
Aghion, P., and Howitt, P., 1992. A model of growth through creative destruction. Econometrica 60, 323-351.
Burk, D.L., and Lemley, M.A., 2009. The patent crisis and how the courts can solve it. The University of Chicago Press.
Cameron, G., 2000. R&D and growth at the industry level. manuscript.
Chu, A.C., 2009. Effects of blocking patents on R&D: a quantitative DGE analysis. Journal of Economic Growth 14, 55-78.
Cozzi, G., Giordani, P., and Zamparelli, L., 2007. The refoundation of the symmetric equilibrium in Schumpeterian growth models. Journal of Economic Theory 136, 788-797.
Dockner, E.J., Jorgensen, S., Long, N.V., and Sorger, G., 2000. Differential games in economics and management science. Cambridge University Press.
Futagami, K., and Iwaisako, T., 2003. Patent policy in an endogenous growth model. Journal of Economics 78, 239-258.
Futagami, K., and Iwaisako, T., 2007. Dynamic analysis of patent policy in an endogenous growth model. Journal of Economic Theory 132, 306-334.
Grossman, G., and Helpman, E., 1991. Quality ladders in the theory of growth. Review of Economic Studies 58, 43-61.
Jones, C.I., 1999. Growth: with or without scale effects. American Economic Review 89, 139-144.
Karp, L., and Lee, I.H., 2003. Time-consistent policies. Journal of Economic Theory 112, 353-364.
Klenow, P.J., 1996. Industry innovation: where and why. Carnegie-Rochester Conference Series on Public Policy 44, 125-150.
Kwan, Y., and Lai, E., 2003. Intellectual property rights protection and endogenous economic growth. Journal of Economic Dynamics and Control 27, 853-873.
Kydland, F.E., and Prescott, E.C., 1977. Rules rather than discretion: the inconsistency of optimal Plans. Journal of Political Economy 85, 473-492.
Li, C.-W., 2001. On the policy implications of endogenous technological progress. Economic Journal 111, C164-C179.
Los, B., and Verspagen, B., 2000. R&D spillovers and productivity: evidence from U.S. manufacturing microdata. Empirical Economics 25, 127-148.
Mosel, M. 2009. Competition, imitation, and R&D productivity in a growth model with sector-specific patent protection. BGPE Discussion Paper No. 84.
Nordhaus, W., 1969. Invention, growth, and welfare. Cambridge, Mass.: The MIT Press.
O’Donoghue, T., and Zweimuller, J., 2004. Patents in a model of endogenous growth. Journal of Economic Growth 9, 81-123.
Scotchmer, S., 2004. Innovation and incentives. Cambridge, Mass.: The MIT Press.
Segerstrom, P., Anant, T., and Dinopoulos, E., 1990. A Schumpeterian model of the product life cycle. American Economic Review 80, 1077-1092.
Verspagen, B., 1995. R&D and productivity: a broad cross-section cross-country look. Journal of Productivity Analysis 6, 117-135.
Xie, D., 1997. On time inconsistency: a technical issue in Stackelberg differential games. Journal of Economic Theory 76, 412-430.
Available Versions of this Item
- The welfare cost of one-size-fit-all patent protection. (deposited 16 Mar 2010 01:20) [Currently Displayed]