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Econometric evidence on the depreciation of innovations

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  • de Rassenfosse, Gaétan
  • Jaffe, Adam B.

Abstract

This paper presents estimates of the depreciation rate of innovations using survey data on revenues associated with Australian patents. Its novelty is twofold. First, it relies on direct observation of the revenue streams of inventions. This is in sharp contrast with previous studies, which all rely on models based on indirect observation and require strong identifying assumptions. Second, it presents estimates of the effect of patent protection on the depreciation rate. Results suggest that the depreciation rate is in 2–7% range. Inventions for which a patent is granted are associated with a 1–2 percentage point reduction in the depreciation rate.

Suggested Citation

  • de Rassenfosse, Gaétan & Jaffe, Adam B., 2018. "Econometric evidence on the depreciation of innovations," European Economic Review, Elsevier, vol. 101(C), pages 625-642.
    • Handle: RePEc:eee:eecrev:v:101:y:2018:i:c:p:625-642
    DOI: 10.1016/j.euroecorev.2017.11.005
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    3. Cristelli, Gabriele & Lissoni, Francesco, 2020. "Free movement of inventors: open-border policy and innovation in Switzerland," MPRA Paper 120099, University Library of Munich, Germany, revised Jan 2024.
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    6. Cristiano Antonelli & Gianluca Orsatti & Guido Pialli, 2023. "The effects of the limited exhaustibility of knowledge on firm size and the direction of technological change," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1359-1385, August.
    7. Ivan Lugovoi & Dimitrios A. Andritsos & Claire Senot, 2022. "Novelty and scope of process innovation: The role of related and unrelated manufacturing experience," Production and Operations Management, Production and Operations Management Society, vol. 31(10), pages 3877-3895, October.
    8. Donadelli, Michael & Grüning, Patrick & Jüppner, Marcus & Kizys, Renatas, 2021. "Global temperature, R&D expenditure, and growth," Energy Economics, Elsevier, vol. 104(C).
    9. Cristiano Antonelli & Christophe Feder, 2023. "The foundations of Schumpeterian dynamics: The European evidence," Journal of Evolutionary Economics, Springer, vol. 33(1), pages 65-96, January.
    10. Chinloy, Peter & Jiang, Cheng & John, Kose, 2020. "Investment, depreciation and obsolescence of R&D," Journal of Financial Stability, Elsevier, vol. 49(C).
    11. Jakub Boratyński & Jacek Osiewalski, 2021. "Bayesian Estimation of Capital Stock and Depreciation in the Production Function Framework," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 13(4), pages 455-486, December.
    12. Gaétan de Rassenfosse & Adam Jaffe & Emilio Raiteri, 2019. "The procurement of innovation by the U.S. government," PLOS ONE, Public Library of Science, vol. 14(8), pages 1-11, August.
    13. Po-Hsuan Hsu & Hsiao-Hui Lee & Tong Zhou, 2022. "Patent Thickets, Stock Returns, and Conditional CAPM," Management Science, INFORMS, vol. 68(11), pages 8343-8367, November.
    14. Hsu, Po-Hsuan & Taylor, Mark P. & Wang, Zigan & Xu, Qi, 2022. "Currency volatility and global technological innovation," Journal of International Economics, Elsevier, vol. 137(C).
    15. Pellegrino, Gabriele & Penner, Orion & Piguet, Etienne & de Rassenfosse, Gaétan, 2023. "Productivity gains from migration: Evidence from inventors," Research Policy, Elsevier, vol. 52(1).
    16. Cristiano Antonelli & Christophe Feder, 2022. "Knowledge properties and the creative response in the global economy: European evidence for the years 1990–2016," The Journal of Technology Transfer, Springer, vol. 47(2), pages 459-475, April.
    17. Jie Liu & Arnulf Grubler & Tieju Ma & Dieter F. Kogler, 2021. "Identifying the technological knowledge depreciation rate using patent citation data: a case study of the solar photovoltaic industry," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(1), pages 93-115, January.
    18. Cristelli, Gabriele & Lissoni, Francesco, 2020. "Free movement of inventors: open-border policy and innovation in Switzerland," MPRA Paper 104120, University Library of Munich, Germany.

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    More about this item

    Keywords

    Appropriability; Intangible asset; Obsolescence; Depreciation; Returns to R&D; Weak patent;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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