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Patent Protection: Of What Value and for How Long?

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Author Info
Jean Olson Lanjouw
Abstract

Empirical estimates of the private value of patent protection are found for four technology area - computers, textiles, combustion engines, and pharmaceuticals - using new patent data for West Germany, 1953-1988. Patentees must pay to keep their patents in force. A dynamic stochastic discrete choice model of optimal renewal decisions is developed incorporating both learning about an innovation and the market as well as the possibility of infringements. The evolution of the distribution of returns over the life of a group of patents is calculated for each technology using a minimum distance simulation estimator. Results indicate that learning is completed within 6 years, that obsolescence is rapid, and that the distributions of patent value are very skewed. Research and development (R&D) expenditures are calculated and patent protection as an implicit subsidy to investment in R&D discussed.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4475.

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Date of creation: Sep 1993
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Publication status: published as The Review of Economic Studies, Vol 65 (1998): 671-710.
Handle: RePEc:nbr:nberwo:4475

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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.:
  1. McFadden, Daniel, 1989. "A Method of Simulated Moments for Estimation of Discrete Response Models without Numerical Integration," Econometrica, Econometric Society, vol. 57(5), pages 995-1026, September. [Downloadable!] (restricted)
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  2. Griliches, Zvi, 1990. "Patent Statistics as Economic Indicators: A Survey," Journal of Economic Literature, American Economic Association, vol. 28(4), pages 1661-1707, December. [Downloadable!] (restricted)
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  3. Ashenfelter, O. & Bloom, D., 1990. "Lawyers As Agents Of The Devil In A Prisoner'S Dilemma Game," Papers 57, Princeton, Woodrow Wilson School - Discussion Paper.
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  4. Cockburn, Iain & Griliches, Zvi, 1988. "Industry Effects and Appropriability Measures in the Stock Market's Valuation of R&D and Patents," American Economic Review, American Economic Association, vol. 78(2), pages 419-23, May. [Downloadable!] (restricted)
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  5. Bronwyn H. Hall & Zvi Griliches & Jerry A. Hausman, 1986. "Patents and R&D: Is There A Lag?," NBER Working Papers 1454, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Ariel Pakes & Margaret Simpson, 1989. "Patent Renewal Data," NBER Reprints 1265, National Bureau of Economic Research, Inc.
  7. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-18, December. [Downloadable!] (restricted)
  8. repec:fth:harver:1473 is not listed on IDEAS
  9. Ariel Pakes & Mark Schankerman, 1979. "The Rate of Obsolescence Of Knowledge, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Working Papers 0346, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  10. repec:fth:prinin:270 is not listed on IDEAS
  11. Jean Olson Lanjouw, 1992. "Under Threat: Potential Competition, Litigation and the Private Value of Patent Protection," STICERD - Economics of Industry Papers 06, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  12. Pakes, Ariel, 1985. "On Patents, R&D, and the Stock Market Rate of Return," Journal of Political Economy, University of Chicago Press, vol. 93(2), pages 390-409, April. [Downloadable!] (restricted)
  13. Richard Gilbert and Carl Shapiro., 1989. "Optimal Patent Length and Breadth," Economics Working Papers 89-102, University of California at Berkeley.
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  1. van Pottelsberghe, Bruno & van Zeebroeck, Nicolas, 2007. "A Brief History of Space and Time: the Scope-Year Index as a Patent Value Indicator Based on Families and Renewals," CEPR Discussion Papers 6321, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
    Other versions:
  2. David Popp, 2005. "They Don't Invent Them Like They Used To: An Examination of Energy Patent Citations Over Time," NBER Working Papers 11415, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  3. Austin, David, 2000. "Patents, Spillovers and Competition in Biotechnology," Discussion Papers dp-00-53, Resources For the Future. [Downloadable!]
  4. Nicolas van Zeebroeck & Bruno van Pottelsberghe, 2008. "Filing strategies and patent value," Working Papers CEB 08-016.RS, Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB). [Downloadable!]
    Other versions:
  5. Eleftherios Sapsalis & Bruno Van Pottelsberghe, 2005. "The institutional sources of knowledge and the value of academic patents," Working Papers CEB 04-003.RS, Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB). [Downloadable!]
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  6. Jean O. Lanjouw & Mark Schankerman, 1997. "Stylized Facts of Patent Litigation: Value, Scope and Ownership," NBER Working Papers 6297, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  7. Nicolas van Zeebroeck, 2007. "The puzzle of patent value indicators," Working Papers CEB 07-023.RS, Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB). [Downloadable!]
  8. Jean Olson Lanjouw & Mark Schankerman, 1998. "Stylised Fact of Patent Litigation: Value, Scope and Ownership," STICERD - Economics of Industry Papers 20, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE. [Downloadable!]
  9. Michele Boldrin & David K. Levine, 2006. "Growth and Intellectual Property," NBER Working Papers 12769, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  10. Jean O. Lanjouw & Josh Lerner, 1997. "The Enforcement of Intellectual Property Rights: A Survey of the Empirical Literature," NBER Working Papers 6296, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  11. Jean O Lanjouw & Josh Lerner, 2004. "The Enforcement of Intellectual Property Rights: A Survey of the Literature," Levine's Working Paper Archive 122247000000000486, UCLA Department of Economics. [Downloadable!]
  12. Jean Olson Lanjouw, 1994. "Economic Consequences of a Changing Litigation Environment: The Case of Patents," NBER Working Papers 4835, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  13. Jean O. Lanjouw & Ariel Pakes & Jonathan Putnam, 1996. "How to Count Patents and Value Intellectual Property: Uses of Patent Renewal and Application Data," NBER Working Papers 5741, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  14. Nicolas van Zeebroeck, 2007. "Patents only live twice: a patent survival analysis in Europe," Working Papers CEB 07-028.RS, Université Libre de Bruxelles, Solvay Business School, Centre Emile Bernheim (CEB). [Downloadable!]
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