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Effects of Patent Policy on Income and Consumption Inequality in a R&D Growth Model

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  • Angus C. Chu

    ()
    (School of Economics, Shanghai University of Finance and Economics, China; and Institute of Economics, Academia Sinica, Taipei, Taiwan.)

Abstract

To analyze the effects of patent policy on growth and inequality, this article develops a qualityladder model with wealth heterogeneity and elastic labor supply. The model predicts that strengthening patent protection increases (a) economic growth by stimulating spending on research and development and (b) income inequality by raising the return on assets. Elastic labor supply creates an additional effect on income inequality. As for consumption inequality, the effect is ambiguous and depends on the elasticity of intertemporal substitution. Calibrating the model to the U.S. data shows that strengthening patent protection increases income inequality by more than consumption inequality, and this pattern is consistent with the data.

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Bibliographic Info

Article provided by Southern Economic Association in its journal Southern Economic Journal.

Volume (Year): 77 (2010)
Issue (Month): 2 (October)
Pages: 336-350

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Handle: RePEc:sej:ancoec:v:77:2:y:2010:p:336-350

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Citations

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Cited by:
  1. Cozzi, Guido & Galli, Silvia, 2013. "Sequential R&D and Blocking Patents in the Dynamics of Growth," Economics Working Paper Series 1305, University of St. Gallen, School of Economics and Political Science.
  2. Guido Cozzi & Silvia Galli, 2009. "Upstream Innovation Protection: Common Law Evolution and the Dynamics of Wage Inequality," Working Papers, Business School - Economics, University of Glasgow 2009_20, Business School - Economics, University of Glasgow.
  3. Asteriou, Dimitrios & Dimelis, Sophia & Moudatsou, Argiro, 2014. "Globalization and income inequality: A panel data econometric approach for the EU27 countries," Economic Modelling, Elsevier, Elsevier, vol. 36(C), pages 592-599.
  4. Sorek, Gilad, 2011. "Patents and quality growth in OLG economy," Journal of Macroeconomics, Elsevier, Elsevier, vol. 33(4), pages 690-699.
  5. Chu, Angus C. & Peng, Shin-Kun, 2011. "International intellectual property rights: Effects on growth, welfare and income inequality," Journal of Macroeconomics, Elsevier, Elsevier, vol. 33(2), pages 276-287, June.
  6. Angus C. Chu, 2009. "Macroeconomic Effects of Intellectual Property Rights: A Survey," IEAS Working Paper : academic research, Institute of Economics, Academia Sinica, Taipei, Taiwan 09-A007, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  7. Chu, Angus C. & Peng, Shin-Kun, 2008. "Effects of TRIPS on Growth, Welfare and Income Inequality in an R&D-Growth Model," MPRA Paper 10956, University Library of Munich, Germany.

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