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

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Chu, Angus C.

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Abstract

To analyze the effects of patent policy on growth and inequality, this paper develops a quality-ladder model with wealth heterogeneity and elastic labor supply. The model predicts that strengthening patent protection increases (a) growth by stimulating R&D and (b) income inequality by raising the return on assets. Elastic labor supply creates an additional effect on income inequality. As for consumption inequality, the effect is ambiguous and depends on the elasticity of intertemporal substitution. Calibrating the model to US data shows that strengthening patent protection increases income inequality by more than consumption inequality, and this pattern is consistent with the data.

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

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Date of creation: Feb 2009
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Handle: RePEc:pra:mprapa:10168

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

Find related papers by JEL classification:
D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
O41 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights

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References listed on IDEAS
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  14. Dirk Krueger & Fabrizio Perri, 2002. "Does Income Inequality Lead to Consumption Inequality? Evidence and Theory," NBER Working Papers 9202, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  15. Jaffe, Adam B., 2000. "The U.S. patent system in transition: policy innovation and the innovation process," Research Policy, Elsevier, vol. 29(4-5), pages 531-557, April. [Downloadable!] (restricted)
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Full references

Cited by:
(explanations, 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. Chu, Angus C. & Peng, Shin-Kun, 2009. "Effects of TRIPS on Growth, Welfare and Income Inequality in an R&D-Growth Model," MPRA Paper 10956, University Library of Munich, Germany. [Downloadable!]
  2. Chu, Angus C., 2009. "Macroeconomic Effects of Intellectual Property Rights: A Survey," MPRA Paper 17342, University Library of Munich, Germany. [Downloadable!]
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This page was last updated on 2009-11-24.

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