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Patent Protection, Technological Change and Wage Inequality: Theory

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Author Info

  • Shiyuan Pan

    (School of Economics and Center for Research of Private Economy, Zhejiang University)

  • Tailong Li

    (School of Economics & Management, Zhejiang Sci-Tech University)

  • Heng-fu Zou

    (Central University of Finance and Economics, CEMA
    Wuhan University IAS
    Peking University
    China Development Bank)

Abstract

We develop a directed-technological-change model to address the issue of the optimal patent system and investigate how the optimal patent system influences the direction of technological change and the inequality of wage, where patents are categorized as skill- and labor-complementary. The major results are: (i) Finite patent breadth maximizes the social welfare level; (ii) Optimal patent breadth increases with the amount of skilled (unskilled) workers; (iii) Optimal patent protection is skill-biased, because an increase in the amount of skilled workers increases the dynamic benefits of the protection for skill-complementary patents via the economy of scale of skill-complementary technology; (iv) Skill-biased patent protection skews inventions towards skills, thus increasing wage inequality.

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Bibliographic Info

Paper provided by China Economics and Management Academy, Central University of Finance and Economics in its series CEMA Working Papers with number 537.

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Length: 21 pages
Date of creation: Mar 2012
Date of revision:
Handle: RePEc:cuf:wpaper:537

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Web page: http://cema.cufe.edu.cn/
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Related research

Keywords: Patent Breadth; Skill-Biased Patent Protection; Skill-Biased Technological Change; Wage Inequality; Economic Growth;

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References

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  1. Chu, Angus C. & Pan, Shiyuan, 2013. "The Escape-Infringement Effect Of Blocking Patents On Innovation And Economic Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 17(04), pages 955-969, June.
  2. Angus Chu, 2009. "Effects of blocking patents on R&D: a quantitative DGE analysis," Journal of Economic Growth, Springer, vol. 14(1), pages 55-78, March.
  3. Ryo Horii & Tatsuro Iwaisako, 2005. "Economic Growth with Imperfect Protection of Intellectual Property Rights," Development and Comp Systems 0508001, EconWPA.
  4. Futagami, Koichi & Iwaisako, Tatsuro, 2007. "Dynamic analysis of patent policy in an endogenous growth model," Journal of Economic Theory, Elsevier, vol. 132(1), pages 306-334, January.
  5. Paul Klemperer, 1990. "How Broad Should the Scope of Patent Protection Be?," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 113-130, Spring.
  6. Chu, Angus C., 2009. "The welfare cost of one-size-fit-all patent protection," MPRA Paper 21401, University Library of Munich, Germany, revised Mar 2010.
  7. Gilbert, R. & Shapiro, C., 1988. "Optimal Patent Length And Breadth," Papers 28, Princeton, Woodrow Wilson School - Discussion Paper.
  8. Guido Cozzi & Silvia Galli, 2009. "Upstream Innovation Protection: Common Law Evolution and the Dynamics of Wage Inequality," Working Papers 2009_20, Business School - Economics, University of Glasgow.
  9. Daron Acemoglu, 1999. "Patterns of Skill Premia," NBER Working Papers 7018, National Bureau of Economic Research, Inc.
  10. Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
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