Advanced Search
MyIDEAS: Login to save this paper or follow this series

Effects of Patent Policy on Income and Consumption Inequality in an R&D-Growth Model

Contents:

Author Info

  • Chu, Angus C.

Abstract

What are the effects of strengthening patent protection on income and consumption inequality? To analyze this question, this paper incorporates heterogeneity in the initial wealth of households into a canonical quality-ladder growth model with endogenous labor supply. In this model, I firstly show that the aggregate economy always jumps immediately to a unique and stable balanced-growth path. Given the balanced-growth behavior of the aggregate economy and an exogenous distribution of initial wealth, I then show that the endogenous distribution of assets in subsequent periods is stationary and equal to its initial distribution. The model predicts that strengthening patent protection increases (a) economic growth by stimulating R&D investment and (b) income inequality by raising the return on assets. However, whether it also increases consumption inequality depends on the elasticity of intertemporal substitution. If and only if this elasticity is less (greater) than unity, strengthening patent protection increases (decreases) consumption inequality. For standard parameter values, strengthening patent protection leads to a larger increase in income inequality than consumption inequality.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://mpra.ub.uni-muenchen.de/10168/
File Function: original version
Download Restriction: no

File URL: http://mpra.ub.uni-muenchen.de/12511/
File Function: revised version
Download Restriction: no

File URL: http://mpra.ub.uni-muenchen.de/14472/
File Function: revised version
Download Restriction: no

Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 10168.

as in new window
Length:
Date of creation: Aug 2008
Date of revision:
Handle: RePEc:pra:mprapa:10168

Contact details of provider:
Postal: Schackstr. 4, D-80539 Munich, Germany
Phone: +49-(0)89-2180-2219
Fax: +49-(0)89-2180-3900
Web page: http://mpra.ub.uni-muenchen.de
More information through EDIRC

Related research

Keywords: endogenous growth; heterogeneity; income inequality; patent policy;

Other versions of this item:

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

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.:
as in new window
  1. Li, Chol-Won, 2001. "On the Policy Implications of Endogenous Technological Progress," Economic Journal, Royal Economic Society, Royal Economic Society, vol. 111(471), pages C164-79, May.
  2. Zweimuller, Josef, 2000. " Schumpeterian Entrepreneurs Meet Engel's Law: The Impact of Inequality on Innovation-Driven Growth," Journal of Economic Growth, Springer, Springer, vol. 5(2), pages 185-206, June.
  3. Charles I. Jones, . "Growth: With or Without Scale Effects?," Working Papers, Stanford University, Department of Economics 99001, Stanford University, Department of Economics.
  4. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  5. Dirk Krueger & Fabrizio Perri, 2006. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory -super-1," Review of Economic Studies, Oxford University Press, vol. 73(1), pages 163-193.
  6. Aghion, P. & Howitt, P., 1989. "A Model Of Growth Through Creative Destruction," UWO Department of Economics Working Papers, University of Western Ontario, Department of Economics 8904, University of Western Ontario, Department of Economics.
  7. Jones, C-I & Williams, J-C, 1996. "Too Much of a Good Thing? The Economics of Investment in R&D," Papers, Harvard - Institute for International Development 538, Harvard - Institute for International Development.
  8. O'Donoghue, Edward & Zweimüller, Josef, 1998. "Patents in a Model of Endogenous Growth," CEPR Discussion Papers, C.E.P.R. Discussion Papers 1951, C.E.P.R. Discussion Papers.
  9. Charles I. Jones & John C. Williams, . "Measuring the Social Return to R&D," Working Papers, Stanford University, Department of Economics 97002, Stanford University, Department of Economics.
  10. Hatipoglu, Ozan, 2008. "Patent, Inequality and Innovation-Driven Growth," MPRA Paper 7855, University Library of Munich, Germany.
  11. Krueger, Dirk & Perri, Fabrizio, 2005. "Does income inequality lead to consumption inequality? Evidence and theory," CFS Working Paper Series 2005/15, Center for Financial Studies (CFS).
  12. Aghion, Philippe & Caroli, Eve & García-Peñalosa, Cecilia, 1999. "Inequality and Economic Growth: The Perspective of the New Growth Theories," Scholarly Articles 12502063, Harvard University Department of Economics.
  13. Cecilia García-Peñalosa & Stephen Turnovsky, 2006. "Growth and income inequality: a canonical model," Economic Theory, Springer, Springer, vol. 28(1), pages 25-49, 05.
  14. Adam B. Jaffe, 1999. "The U.S. Patent System in Transition: Policy Innovation and the Innovation Process," NBER Working Papers 7280, National Bureau of Economic Research, Inc.
  15. Edward N. Wolff, 1998. "Recent Trends in the Size Distribution of Household Wealth," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 12(3), pages 131-150, Summer.
  16. Galor, Oded & Zeira, Joseph, 1988. "Income Distribution and Macroeconomics," MPRA Paper 51644, University Library of Munich, Germany, revised 01 Sep 1989.
  17. Ginarte, Juan C. & Park, Walter G., 1997. "Determinants of patent rights: A cross-national study," Research Policy, Elsevier, Elsevier, vol. 26(3), pages 283-301, October.
  18. Reto Foellmi & Josef Zweimüller, . "Income Distribution and Demand-induced Innovations," IEW - Working Papers, Institute for Empirical Research in Economics - University of Zurich 212, Institute for Empirical Research in Economics - University of Zurich.
  19. Kristin J. Forbes, 2000. "A Reassessment of the Relationship between Inequality and Growth," American Economic Review, American Economic Association, American Economic Association, vol. 90(4), pages 869-887, September.
  20. Santiago Budria Rodriguez & Javier Diaz-Gimenez & Vincenzo Quadrini & Jose-Victor Rior-Rull, 2002. "Updated facts on the U.S. distributions of earnings, income, and wealth," Quarterly Review, Federal Reserve Bank of Minneapolis, Federal Reserve Bank of Minneapolis, issue Sum, pages 2-35.
  21. Goel, Rajeev K. & Payne, James E. & Ram, Rati, 2008. "R&D expenditures and U.S. economic growth: A disaggregated approach," Journal of Policy Modeling, Elsevier, Elsevier, vol. 30(2), pages 237-250.
  22. Adam B. Jaffe & Josh Lerner, 2006. "Innovation and its Discontents," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 27-66 National Bureau of Economic Research, Inc.
  23. Li, Hongyi & Zou, Heng-fu, 1998. "Income Inequality Is Not Harmful for Growth: Theory and Evidence," Review of Development Economics, Wiley Blackwell, Wiley Blackwell, vol. 2(3), pages 318-34, October.
  24. Ricardo J. Caballero & Adam B. Jaffe, 1993. "How High are the Giants' Shoulders: An Empirical Assessment of Knowledge Spillovers and Creative Destruction in a Model of Economic Growth," NBER Chapters, in: NBER Macroeconomics Annual 1993, Volume 8, pages 15-86 National Bureau of Economic Research, Inc.
  25. Daron Acemoglu & Ufuk Akcigit, 2006. "State-Dependent Intellectual Property Rights Policy," NBER Working Papers 12775, National Bureau of Economic Research, Inc.
  26. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
  27. repec:ubc:bricol:96-03 is not listed on IDEAS
  28. Goel, Rajeev K & Ram, Rati, 1994. "Research and Development Expenditures and Economic Growth: A Cross-Country Study," Economic Development and Cultural Change, University of Chicago Press, University of Chicago Press, vol. 42(2), pages 403-11, January.
  29. Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, American Economic Association, vol. 16(2), pages 131-154, Spring.
  30. Persson, Torsten & Tabellini, Guido, 1994. "Is Inequality Harmful for Growth?," American Economic Review, American Economic Association, American Economic Association, vol. 84(3), pages 600-621, June.
  31. Park, Walter G., 2008. "International patent protection: 1960-2005," Research Policy, Elsevier, Elsevier, vol. 37(4), pages 761-766, May.
  32. Reed, Deborah & Cancian, Maria, 2001. "Sources of Inequality: Measuring the Contributions of Income Sources to Rising Family Income Inequality," Review of Income and Wealth, International Association for Research in Income and Wealth, International Association for Research in Income and Wealth, vol. 47(3), pages 321-33, September.
  33. Chou, Chien-Fu & Talmain, Gabriel, 1996. " Redistribution and Growth: Pareto Improvements," Journal of Economic Growth, Springer, Springer, vol. 1(4), pages 505-23, December.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Asteriou, Dimitrios & Dimelis, Sophia & Moudatsou, Argiro, 2014. "Globalization and income inequality: A panel data econometric approach for the EU27 countries," Economic Modelling, Elsevier, Elsevier, vol. 36(C), pages 592-599.
  2. Angus C. Chu & Shin-Kun Peng, 2009. "International Intellectual Property Rights: Effects on Growth, Welfare and Income Inequality," IEAS Working Paper : academic research, Institute of Economics, Academia Sinica, Taipei, Taiwan 09-A006, Institute of Economics, Academia Sinica, Taipei, Taiwan.
  3. Guido Cozzi & Silvia Galli, 2009. "Upstream Innovation Protection: Common Law Evolution and the Dynamics of Wage Inequality," Working Papers, Business School - Economics, University of Glasgow 2009_20, Business School - Economics, University of Glasgow.
  4. Guido Cozzi & Silvia Galli, 2014. "Sequential R&D and blocking patents in the dynamics of growth," Journal of Economic Growth, Springer, Springer, vol. 19(2), pages 183-219, June.
  5. Chu, Angus C. & Peng, Shin-Kun, 2008. "Effects of TRIPS on Growth, Welfare and Income Inequality in an R&D-Growth Model," MPRA Paper 10956, University Library of Munich, Germany.
  6. Sorek, Gilad, 2011. "Patents and quality growth in OLG economy," Journal of Macroeconomics, Elsevier, Elsevier, vol. 33(4), pages 690-699.
  7. Angus C. Chu, 2009. "Macroeconomic Effects of Intellectual Property Rights: A Survey," IEAS Working Paper : academic research, Institute of Economics, Academia Sinica, Taipei, Taiwan 09-A007, Institute of Economics, Academia Sinica, Taipei, Taiwan.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:10168. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.