Patent Policy at a Tipping Point: Why Stronger Patent Protection May Not Foster Economic Growth

Bom, Pedro R.D. and Stojanovikj, Martin (2025): Patent Policy at a Tipping Point: Why Stronger Patent Protection May Not Foster Economic Growth.

Abstract

According to the available evidence, stronger patent protection exerts, at best, a modest positive effect on economic growth. Different variants of Schumpeterian growth models predict a wide range of outcomes, from strongly positive to strongly negative effects. We propose a Schumpeterian growth model with endogenous innovation scale, a generalized innovation function that combines R&D lab-equipment and labor-embodied technical knowledge, and a complexity-of-innovation effect. Consistent with the evidence, plausible calibrations of the model suggest that a typical OECD economy lies near the peak of an inverted-U-shaped curve, where the effect of stronger patent protection on growth is close to zero. In some cases, this effect may even be negative.

• Item Type: MPRA Paper
• Language: English
• Keywords: Endogenous innovation scale; Endogenous markups; Patent breadth; Economic growth; Innovation.
• Subjects: O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O30 - General; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O40 - General

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