Intellectual property rights protection and endogenous economic growth

2010

J. Econ.

This paper develops an R&D-growth model and calibrates the model to aggregate data of the US economy to quantify a structural relationship between patent length, R&D and consumption. Under parameter values that match the empirical flow-profit depreciation rate of patents and other key features of the US economy, extending the patent length beyond 20 years leads to a negligible increase in R&D despite equilibrium R&D underinvestment. In contrast, shortening the patent length leads to a significant reduction in R&D and consumption. Finally, this paper also analytically derives and quantifies a dynamic distortionary effect of patent length on capital investment.

Section: Introductioncontrasting

confidence: 93%

“…In terms of quantitative analysis on patent length, an important study is Kwan and Lai (2003), and they find substantial welfare gains from extending the effective lifetime of patent. There is an important reason for the contradicting results between Kwan and Lai (2003) and the present study.…”

Section: Introductionmentioning

confidence: 99%

Effects of patent length on R&D: a quantitative DGE analysis

2010

J. Econ.

“…After setting r to the lower bound of 0.30 as in Williams (1998, 2000), (30) and (40) pin down a unique value of γ and φ for each value of ξ . For lower values of ξ , the implied social return to R&D would be less than 0.3.…”

Section: Externality Parametersmentioning

confidence: 99%

“…In other words, in a model with capital, it is possible for households to avoid short-run consumption losses by running down the capital stock, and this finding is different from models without capital accumulation. See, for example, Kwan and Lai (2003) for an interesting analysis on the transition dynamic effects of patent policy in a varietyexpanding model without capital accumulation. 18 Because the value of the household's utility is negative given that 1 > σ -25 -…”

Section: Dynamic Distortionmentioning

confidence: 99%

Effects of blocking patents on R&D: a quantitative DGE analysis

2009

J Econ Growth

What are the effects of blocking patents on R&D and consumption? This paper develops a quality-ladder growth model with overlapping intellectual property rights and capital accumulation to quantitatively evaluate the effects of blocking patents. The analysis focuses on two policy variables (a) patent breadth that determines the amount of profits created by an invention, and (b) the profit-sharing rule that determines the distribution of profits between current and former inventors along the quality ladder. The model is calibrated to aggregate data of the US economy. Under parameter values that match key features of the US economy and show equilibrium R&D underinvestment, I find that reducing the extent of blocking patents by changing the profit-sharing rule would lead to a significant increase in R&D, consumption and welfare. Also, the paper derives and quantifies a dynamic distortionary effect of patent policy on capital accumulation.

“…In a dynamic general-equilibrium model, Judd (1985) …nds that the optimal patent length is in…nite while Iwaisako and Futagami (2003) and Futagami and Iwaisako (2007) …nd that the optimal patent length can be …nite in a version of the Romer model. Kwan and Lai (2003) show that extending the e¤ective lifetime of patent would lead to a substantial increase in R&D and welfare whereas Li (2001) and O'Donoghue and Zweimuller (2004) consider the e¤ects of patent breadth on R&D and economic growth. Dinopoulos and Syropoulos (2007) and Davis and Sener (2012) analyze the e¤ects of rent protection activities on innovation.…”

Section: Introductionmentioning

confidence: 99%

Stage-dependent intellectual property rights

Journal of Development Economics

Cozzi

Galli

2014

Inspired by the Chinese experience, we develop a Schumpeterian growth model of distance to frontier in which economic growth in the developing country is driven by domestic innovation as well as imitation and transfer of foreign technologies through foreign direct investment. We show that optimal intellectual property rights (IPR) protection is stage-dependent. At an early stage of development, the country implements weak IPR protection to facilitate imitation. At a later stage of development, the country implements strong IPR protection to encourage domestic innovation. Therefore, the growth-maximizing and welfare-maximizing levels of patent strength increase as the country evolves towards the world technology frontier, and this dynamic pattern is consistent with the actual evolution of patent strength in China. We are very grateful to the anonymous Referees and Patrick Francois (the Editor) for their insightful comments that have improved the manuscript signi…cantly. We also would like to thank Elias Dinopoulos, Rachel Gri¢ th, Oleksandr Talavera, Fabrizio Zilibotti, and seminar participants at