Patentability, industry structure, and innovation
AbstractTo qualify for a patent, an invention must be new, useful, and nonobvious. This paper presents a model of sequential innovation in which industry structure is endogenous and a standard of patentability determines the proportion of all inventions that qualify for protection. There is a unique patentability standard, or inventive step, that maximizes the rate of innovation by maximizing the number of firms engaged in R&D. Surprisingly, this standard is more stringent for industries disposed to innovate rapidly. If a single standard is applied to heterogeneous industries, it will encourage entry, and therefore innovation, in some industries while discouraging it in others. The model suggest a number of important implications for patent policy.
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Bibliographic InfoPaper provided by Federal Reserve Bank of Philadelphia in its series Working Papers with number 01-13.
Date of creation: 2002
Date of revision:
Other versions of this item:
- NEP-ALL-2001-11-05 (All new papers)
- NEP-ENT-2001-11-05 (Entrepreneurship)
- NEP-TID-2001-11-05 (Technology & Industrial Dynamics)
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