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Patent activity and technical change

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

Abstract

As creations of the mind, intellectual property includes industrial property and copyrights. 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. Patents should alter isoquant maps, and measuring their elasticities is both intuitively and empirically appealing. 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 patent applications, 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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Cited by:
  1. Dong-hyun Oh & Almas Heshmati & Hans Loof, 2009. "Total Factor Productivity of Korean Manufacturing Industries: Comparison of Competing Models with Firm-Level Data," TEMEP Discussion Papers 200922, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Nov 2009.
  2. Michalski, Tomasz, 2012. "Input substitutability, trade costs and location," Economics Letters, Elsevier, vol. 117(1), pages 57-59.

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