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Effects of Patent Length on R&D: A Quantitative DGE Analysis

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  • Chu, Angus C.

Abstract

This paper develops an R&D-growth model and calibrates the model to aggregate data of the US economy to quantify a structural relationship between patent length, R&D and consumption. Under parameter values that match the empirical flow-profit depreciation rate of patents and other key features of the US economy, extending the patent length beyond 20 years leads to a negligible increase in R&D despite equilibrium R&D underinvestment. In contrast, shortening the patent length leads to a significant reduction in R&D and consumption. Finally, this paper also analytically derives and quantifies a dynamic distortionary effect of patent length on capital investment.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16918.

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Date of creation: Aug 2009
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Handle: RePEc:pra:mprapa:16918

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Keywords: innovation-driven growth; intellectual property rights; patent length; R&D;

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References

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  15. Kwan, Yum K. & Lai, Edwin L. -C., 2003. "Intellectual property rights protection and endogenous economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 27(5), pages 853-873, March.
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Cited by:
  1. Chu, Angus C. & Leung, Charles Ka Yui & TANG, C. H. Edward, 2012. "Intellectual property rights, technical progress and the volatility of economic growth," MPRA Paper 38132, University Library of Munich, Germany.
  2. Furukawa, Yuichi, 2010. "Intellectual property protection and innovation: an inverted-U relationship," Economics Letters, Elsevier, vol. 109(2), pages 99-101, November.
  3. Chu, Angus C., 2009. "Macroeconomic Effects of Intellectual Property Rights: A Survey," MPRA Paper 17342, University Library of Munich, Germany.
  4. Shiyuan Pan & Heng-fu Zou & Tailong Li, 2010. "Patent Protection, Technological Change and Wage Inequality," CEMA Working Papers 437, China Economics and Management Academy, Central University of Finance and Economics.

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