Patent Protection and Strategic Delays in Technology Development: Implications for Economic Growth
AbstractWe present an endogenous growth model in which both the investment to develop a new technology— that upgrades the quality of machines—and entry of imitators are determined endogenously. According to the model, how soon the new-technology machine is launched after the patent is granted is influenced by two factors: returns to scale in technology development and "strategic delays." Strategic delays in technology development are most likely to occur when earlier dates of success enable imitators to enter an industry, that is, when imitation is swift and relatively cheap and/or patent protection is relatively lengthy. We then explore the link between the optimal patent length and economic growth and find that the equilibrium investment in technology development and thus the expected rate of technological progress exhibit an inverted U-shape relationship with respect to the legal patent length.
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Bibliographic InfoArticle provided by Southern Economic Association in its journal Southern Economic Journal.
Volume (Year): 78 (2011)
Issue (Month): 1 (July)
Other versions of this item:
- Maggie Xiaoyang Chen & Murat Iyigun, 2010. "Patent Protecton and Strategic Delays in Technology Development: Implications for Econonmic Growth," Working Papers 2010-19, The George Washington University, Institute for International Economic Policy.
- O11 - Economic Development, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
- O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
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