When a new technology consists of sequences of innovations that culminate in a final consumer product, the balance between successive innovators is one of the main concerns in the design of the patent system. While intertemporal aspects of incentive are critical in this environment of sequential innovations, time plays a minor role in existing literature on dynamic models. By focusing on the incentives of follow-on innovators who commercialize an initial invention, this study examines the dynamic implications of the patent instrument (e.g., patent life) via a positive analysis. It shows that a long patent life may encourage innovation incentives and increase social welfare, contrary to existing arguments that argue that long patent life always discourages the incentive for subsequent innovations. This study also examines the implications of finite patent system in different market structures.
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Paper provided by International Food Policy Research Institute (IFPRI) in its series EPTD discussion papers with number
88.
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Horowitz, Andrew W & Lai, Edwin L-C, 1996.
"Patent Length and the Rate of Innovation,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 37(4), pages 785-801, November.