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Patent Renewals and R&D Incentives

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Author Info
Francesca Cornelli
Mark Schankerman
Abstract

In a model with moral hazard and asymmetric information, we show that it can be welfare improving to differentiate patent lives when firms have different R&D productivities. A uniform patent life provides too much R&D incentive to low-productivity firms and too little to high-productivity ones. The optimally differentiated patent scheme can be implemented through a menu of patent lives (or renewals) and associated fees. We characterize the optimal mechanism and use simulation analysis to compare it with existing patent renewal systems and to illustrate the potential welfare gains from the optimal policy.

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File URL: http://links.jstor.org/sici?sici=0741-6261%28199922%2930%3A2%3C197%3APRARI%3E2.0.CO%3B2-6&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 30 (1999)
Issue (Month): 2 (Summer)
Pages: 197-213
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Handle: RePEc:rje:randje:v:30:y:1999:i:summer:p:197-213

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  3. Nancy Gallini and Suzanne Scotchmer., 2001. "Intellectual Property: When Is It the Best Incentive System?," Economics Working Papers E01-303, University of California at Berkeley. [Downloadable!]
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  4. Suzanne Scotchmer., 1999. "Delegating Investment in a Common-Value Project," Economics Working Papers E99-266, University of California at Berkeley. [Downloadable!]
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  5. van Pottelsberghe, Bruno & van Zeebroeck, Nicolas, 2008. "Filing Strategies and Patent Value," CEPR Discussion Papers 6821, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  6. Josh Lerner, 2000. "150 Years of Patent Office Practice," NBER Working Papers 7477, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  7. Deng, Yi, 2005. "Private Value of European Patents," Departmental Working Papers 0513, Southern Methodist University, Department of Economics. [Downloadable!]
  8. Gerard Llobet & Hugo Hopenhayn & Matthew Mitchell, 2003. "Rewarding Sequential Innovators: Prizes, Patents and Buyouts," Levine's Working Paper Archive 618897000000000682, David K. Levine. [Downloadable!]
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  9. Corinne Langinier & GianCarlo Moschini, 2002. "Economics of Patents: An Overview, The," Center for Agricultural and Rural Development (CARD) Publications 02-wp293, Center for Agricultural and Rural Development (CARD) at Iowa State University. [Downloadable!]
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  10. Nicolas van Zeebroeck, 2008. "Long live patents: the increasing life expectancy of patent applications and its determinants," Working Papers CEB 08-040.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
  11. Fier, Andreas & Harhoff, Dietmar, 2001. "Die Evolution der bundesdeutschen Forschungs- und Technologiepolitik : Rückblick und Bestandsaufnahme," ZEW Discussion Papers 01-61, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research. [Downloadable!]
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  12. Nicolas van Zeebroeck, 2007. "The puzzle of patent value indicators," Working Papers CEB 07-023.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
  13. Nancy Gallini & Suzanne Scotchmer, 2001. "Intellectual Property: When Is It the Best Incentive System?," Department of Economics, Working Paper Series 1010, Department of Economics, Institute for Business and Economic Research, UC Berkeley. [Downloadable!]
  14. Nicolas van Zeebroeck, 2007. "Patents only live twice: a patent survival analysis in Europe," Working Papers CEB 07-028.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
  15. Matthew Mitchell, 2000. "Rewarding Sequential Innovators: Patents Prizes and Buyouts," Econometric Society World Congress 2000 Contributed Papers 1650, Econometric Society. [Downloadable!]
  16. Pierre Regibeau & Katharine Rockett, 2004. "The Relationship Between Intellectual Property Law and Competition Law: An Economic Approach," Economics Discussion Papers 581, University of Essex, Department of Economics. [Downloadable!]
  17. repec:bep:thetop:v:4:y:2004:i:1:p:1147-1147 is not listed on IDEAS
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