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R&D and the Patent Premium

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  • Ashish Arora
  • Marco Ceccagnoli
  • Wesley M. Cohen

Abstract

We analyze the effect of patenting on R&D with a model linking a firm's R&D effort with its decision to patent, recognizing that R&D and patenting affect one another and are both driven by many of the same factors. Using survey data for the U.S. manufacturing sector, we estimate the increment to the value of an innovation realized by patenting it, and then analyze the effect on R&D of changing that premium. Although patent protection is found to provide a positive premium on average in only a few industries, our results also imply that it stimulates R&D across almost all manufacturing industries, with the magnitude of that effect varying substantially.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 9431.

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Date of creation: Jan 2003
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Publication status: published as Arora, Ashish, Marco Ceccagnoli, and Wesley M. Cohen. "R&D and the Patent Premium", International Journal of Industrial Organization, Volume 26, Issue 5, September 2008, Pages 1153-1179
Handle: RePEc:nbr:nberwo:9431

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  1. Shapiro, Carl, 2000. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," Competition Policy Center, Working Paper Series, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley qt4hs5s9wk, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
  2. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
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