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Economics of Patents: An Overview, The

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  • Langinier, Corinne
  • Moschini, GianCarlo

Abstract

In this paper, we review the economic effects of intellectual property rights and specifically address the economics of the patent system. The production and dissemination of new knowledge is fraught with market failures because knowledge is a public good. Patents provide a second-best solution to the resulting appropriability problem. We review the main benefits and costs of the patent system, focusing on the role that patents play in providing incentives for innovation, in promoting the dissemination of knowledge, and in helping technology transfer and commercialization of new technology. From a more normative perspective, we address the questions of what the features of an optimal patent system are and whether the patent system is socially desirable. We examine the problem of the optimal length and scope of patent protection, both for the case of a single innovation and for the richer case of cumulative innovations. Finally, we review the issues related to how the patent system influences the market structure and research and development investments.

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Bibliographic Info

Paper provided by Iowa State University, Department of Economics in its series Staff General Research Papers with number 2061.

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Date of creation: 01 Jan 2002
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Handle: RePEc:isu:genres:2061

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References

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  1. 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.
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  3. Dasgupta, Partha & Maskin, Eric, 1987. "The Simple Economics of Research Portfolios," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 97(387), pages 581-95, September.
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  5. Loury, Glenn C, 1979. "Market Structure and Innovation," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 93(3), pages 395-410, August.
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  7. Suzanne Scotchmer & Jerry Green, 1990. "Novelty and Disclosure in Patent Law," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 131-146, Spring.
  8. Fudenberg, Drew & Gilbert, Richard & Stiglitz, Joseph & Tirole, Jean, 1983. "Preemption, leapfrogging and competition in patent races," European Economic Review, Elsevier, Elsevier, vol. 22(1), pages 3-31, June.
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  22. Kamien, Morton I & Schwartz, Nancy L, 1974. "Patent Life and R & D Rivalry," American Economic Review, American Economic Association, American Economic Association, vol. 64(1), pages 183-87, March.
  23. Scherer, F M, 1972. "Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review, American Economic Association, American Economic Association, vol. 62(3), pages 422-27, June.
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  29. Pankaj Tandon, 1983. "Rivalry and the Excessive Allocation of Resources to Research," Bell Journal of Economics, The RAND Corporation, The RAND Corporation, vol. 14(1), pages 152-165, Spring.
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Cited by:
  1. Michel Trommetter, 2010. "Flexibility in the implementation of intellectual property rights in agricultural biotechnology," European Journal of Law and Economics, Springer, Springer, vol. 30(3), pages 223-245, December.
  2. Katrin Hussinger, 2006. "Is Silence Golden? Patents Versus Secrecy At The Firm Level," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(8), pages 735-752.
  3. GianCarlo Moschini, 2003. "Intellectual Property Rights and the World Trade Organization: Retrospect and Prospects," Center for Agricultural and Rural Development (CARD) Publications 03-wp334, Center for Agricultural and Rural Development (CARD) at Iowa State University.
  4. Trommetter, M., 2008. "Intellectual property rights in agricultural and agro-food biotechnologies to 2030 (© OECD International Futures Programme)," Working Papers, Grenoble Applied Economics Laboratory (GAEL) 200805, Grenoble Applied Economics Laboratory (GAEL).
  5. Emmanuelle Auriol & Sara Biancini & Rodrigo Paillacar, 2013. "Universal Intellectual Property Rights: Too Much of a Good Thing?," CESifo Working Paper Series 4292, CESifo Group Munich.

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