On the Policy Implications of Endogenous Technological Progress

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.

Section: Socially Optimal Level Of Randd Spendingmentioning

confidence: 99%

“…In a sense, this finding is not surprising given the large estimated social return to R&D. Optimal R&D share increases in ξ in Figure 3 because a larger ξ implies a larger Table 2. Applying the log approximation x x ≈ + ) 1 ln( to (C4) and combining it with (34), it can be shown that …”

Section: Socially Optimal Level Of Randd Spendingmentioning

confidence: 99%

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

2009

J Econ Growth

“…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

“…Specifically, we incorporate into the model mainly two features (a) patent breadth as in Li (2001) and (b) aggregate uncertainty in the innovation process. Given that the quality-ladder model has been well-studied, the familiar components of the model will be briefly described to conserve space while the new features will be described in more details below.…”

Section: The Modelmentioning

confidence: 99%

“…Li (2001) generalizes the policy environment to allow for incomplete patent breadth ) 1 , 0 (  b against imitation. Due to incomplete patent protection, the former industry leader's productivity increases by a factor b z  1 (i.e., her productivity becomes…”

Section: Final Goodsmentioning

confidence: 99%

Intellectual property rights, technical progress and the volatility of economic growth

Journal of Macroeconomics

Leung

Tang

2012

In this note, we analyze the effects of intellectual property rights on the volatility of economic growth. Our analysis is motivated by the observation that the strengthening of patent protection and the increase in R&D in the US coincide with a reduction in growth volatility beginning in the mid 1980's. To analyze this phenomenon, we develop an R&D-based growth model with aggregate uncertainty in the innovation process and apply the model to ask whether increasing patent strength and R&D can lead to a significant reduction in growth volatility. We find a small but non-negligible effect that explains no less than 10% of the observed reduction in growth volatility in the US. Keywords Intellectual Property Rights, Technical Progress and the Volatility of Economic Growth March 2012 AbstractIn this note, we analyze the effects of intellectual property rights on the volatility of economic growth. Our analysis is motivated by the observation that the strengthening of patent protection and the increase in R&D in the US coincide with a reduction in growth volatility beginning in the mid 1980's. To analyze this phenomenon, we develop an R&D-based growth model with aggregate uncertainty in the innovation process and apply the model to ask whether increasing patent strength and R&D can lead to a significant reduction in growth volatility. We find a small but non-negligible effect that explains no less than 10% of the observed reduction in growth volatility in the US.