Lin, Hwan C. (2013): Creative Destruction and Optimal Patent Life in a Variety-Expanding Growth Model.
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Abstract
This paper presents more channels through which the optimal patent life is determined in a R&D-based endogenous growth model that permits growth of new varieties of consumer goods over time. Its modeling features include an endogenous hazard rate facing incumbent monopolists, the prevalence of research congestion, and the aggregate welfare importance of product differentiation. As a result, a patent’s effective life is endogenized and less than its legal life. The model is calibrated to a global economy with a set of baseline parameter values. Under the benchmark patent length of 20 years, the calibrated model can deliver along the balanced growth path a plausible innovation rate of 2.84% per year and an economy-wide markup rate of 1.15. The optimal patent length is computed with the algorithm of Golden Search Section, ranging from 17 to 19 years. With the creative-destruction hazard, the world needs a longer patent term to maximize social welfare, but with the prevalence of research congestion, the world needs a shorter patent term. However, if the world’s aggregate welfare appreciates varieties of goods in a way strong enough, the optimal patent term can surprisingly extend beyond even 1,000 years!
Item Type: | MPRA Paper |
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Original Title: | Creative Destruction and Optimal Patent Life in a Variety-Expanding Growth Model |
English Title: | Creative Destruction and Optimal Patent Life in a Variety-Expanding Growth Model |
Language: | English |
Keywords: | patent length, innovation, creative destruction, endogenous hazard rate |
Subjects: | 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 > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital |
Item ID: | 52109 |
Depositing User: | Hwan C. Lin |
Date Deposited: | 10 Dec 2013 21:23 |
Last Modified: | 29 Sep 2019 01:45 |
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URI: | https://mpra.ub.uni-muenchen.de/id/eprint/52109 |
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Optimal Patent Life in a Variety-Expansion Growth Model. (deposited 13 Sep 2013 08:02)
- Creative Destruction and Optimal Patent Life in a Variety-Expanding Growth Model. (deposited 10 Dec 2013 21:23) [Currently Displayed]