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Patent activity and technical change

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  • Basmann, Robert L.
  • McAleer, Michael
  • Slottje, Daniel

Abstract

This paper presents an aggregate production function of the generalized Fechner-Thurstone (GFT) form to analyze the impact of an important component of intellectual industrial property, namely patent activity, on technical change in the USA for the period 1947-1981. We define a technology-changer as a variable that has an impact on the elasticity of the marginal rate of technical substitution (mrts) between inputs of the GFT production function over time. Various types of US patent grant activity, specifically total, domestic, foreign, successful and unsuccessful patents, are used as instruments for the technology-changer. Using the GFT specification, the impacts of various technology-changers on the elasticity of the mrts between inputs are estimated directly. It is found that granted (or successful) patents, patents granted to foreign companies and individuals, total patent applications, and even unsuccessful patent applications, have significant impacts on the rates at which inputs are substituted for each other over time in production.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Econometrics.

Volume (Year): 139 (2007)
Issue (Month): 2 (August)
Pages: 355-375

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Handle: RePEc:eee:econom:v:139:y:2007:i:2:p:355-375

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Web page: http://www.elsevier.com/locate/jeconom

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  1. Basmann, R. L. & Hayes, K. J. & Slottje, D. J. & Molina, D. J., 1987. "A new method for measuring technological change," Economics Letters, Elsevier, vol. 25(4), pages 329-333.
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Cited by:
  1. Oh, Donghyun & Heshmati, Almas & Lööf, Hans, 2009. "Total Factor Productivity of Korean Manufacturing Industries: Comparison of Competing Models with Firm-Level Data," Working Paper Series in Economics and Institutions of Innovation 201, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  2. Michalski, Tomasz, 2012. "Input substitutability, trade costs and location," Economics Letters, Elsevier, vol. 117(1), pages 57-59.

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