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Patent Rights, Product Market Reforms, and Innovation

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  • Philippe Aghion
  • Peter Howitt
  • Susanne Prantl

Abstract

Can patent protection and product market competition complement each other in enhancing incentives to innovate? In this paper, we address this question by investigating how innovation responses to a substantial policy initiative increasing product market competition interact with the strength of patent rights. We provide empirical evidence of innovation responding positively to the product market reform in industries of countries where patent rights are strong, not where these are weak. The positive response to the reform is more pronounced in industries in which innovators rely more on patenting than in other industries, and in which the scope for deterring entry through patenting is not too large. Our empirical findings are in line with step-by-step innovation models predicting that product market competition enhances innovation and, more importantly, that patent protection can complement competition in inducing innovation.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18854.

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Date of creation: Feb 2013
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Handle: RePEc:nbr:nberwo:18854

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Cited by:
  1. Philippe Aghion & Ufuk Akcigit & Peter Brown, 2013. "What Do We Learn From Schumpeterian Growth Theory?," PIER Working Paper Archive, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania 13-026, Penn Institute for Economic Research, Department of Economics, University of Pennsylvania.
  2. A. Minniti & F. Venturini, 2014. "R&D Policy and Schumpeterian Growth: Theory and Evidence," Working Papers wp945, Dipartimento Scienze Economiche, Universita' di Bologna.

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