Patents versus R&D subsidies in a Schumpeterian growth model with endogenous market structure

Chu, Angus C. and Furukawa, Yuichi (2012): Patents versus R&D subsidies in a Schumpeterian growth model with endogenous market structure.

Abstract

In this note, we explore the different implications of patent breadth and R&D subsidies on economic growth and endogenous market structure in a Schumpeterian growth model. We find that these two policy instruments have the same positive effect on economic growth when the model exhibits counterfactual scale effects under an exogenous number of firms. However, when the model becomes scale-invariant under an endogenous number of �firms, R&D subsidies increase economic growth but decrease the number of firms, whereas patent breadth expands the number of firms but reduces economic growth. Therefore, R&D subsidy is perhaps a more suitable policy instrument than patent breadth for the purpose of stimulating economic growth.

• Item Type: MPRA Paper
• Language: English
• Keywords: economic growth, endogenous market structure, patents, R&D subsidies
• 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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