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Do patents over-compensate innovators?
[‘State-dependent intellectual property rights policy’]

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  • Vincenzo Denicolò

Abstract

Is the current level of patent protection too high or too low? To address this issue, this paper reformulates the theoretical analysis of the optimal level of patent protection to take into account the empirical findings of the innovation production function literature. This literature finds a strong relationship between R&D spending and inventions and estimates an elasticity of the supply of inventions of 0.5 or more. The paper then assesses the current level of patent protection, exploiting estimates of the private and social returns to R&D taken from the empirical literature and other available sources. Although more research is needed for a more precise assessment, the evidence available suggests that patents do not over-compensate innovators.— Vincenzo Denicolò

Suggested Citation

  • Vincenzo Denicolò, 2007. "Do patents over-compensate innovators? [‘State-dependent intellectual property rights policy’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 22(52), pages 680-729.
    • Handle: RePEc:oup:ecpoli:v:22:y:2007:i:52:p:680-729.
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    File URL: http://hdl.handle.net/10.1111/j.1468-0327.2007.00188.x
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    Cited by:

    1. Ottoz, Elisabetta & Cugno, Franco, 2011. "Choosing the scope of trade secret law when secrets complement patents," International Review of Law and Economics, Elsevier, vol. 31(4), pages 219-227.
    2. Stoneman, Paul, 2011. "Soft Innovation: Economics, Product Aesthetics, and the Creative Industries," OUP Catalogue, Oxford University Press, number 9780199697021.
    3. Arai, Yasuhiro, 2011. "Civil and criminal penalties for copyright infringement," Information Economics and Policy, Elsevier, vol. 23(3), pages 270-280.
    4. Denicolò, Vincenzo & Polo, Michele, 2018. "Duplicative research, mergers and innovation," Economics Letters, Elsevier, vol. 166(C), pages 56-59.
    5. Annalisa Biagi & Vincenzo Denicolò, 2014. "Timing of Discovery and the Division of Profit With Complementary Innovations," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 23(1), pages 89-102, March.
    6. Elisabetta Ottoz & Franco Cugno, 2008. "Patent--Secret Mix in Complex Product Firms," American Law and Economics Review, American Law and Economics Association, vol. 10(1), pages 142-158.
    7. Francesco Bogliacino & Alberto José Naranjo Ramos, 2008. "Optimal intellectual property rights protection: the case of Colombia," Economics Bulletin, AccessEcon, vol. 15(20), pages 1-15.
    8. Silvia Galli, 2006. "Patents and Research Tools in a Schumpeterian Growth Model with Sequential Innovation," Rivista di Politica Economica, SIPI Spa, vol. 96(6), pages 63-104, November-.

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