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Patents versus R&D subsidies in a Schumpeterian growth model with endogenous market structure

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  • Chu, Angus C.
  • Furukawa, Yuichi

Abstract

This letter explores the different implications of patent breadth and R&D subsidies on economic growth and endogenous market structure in a Schumpeterian model. We find that the two policy instruments have the same positive effect on economic growth when the model exhibits scale effects under a fixed number of firms. When the model becomes scale-invariant under an endogenous number of firms, patent breadth increases economic growth but decreases the number of firms, whereas R&D subsidies increase the number of firms but decrease economic growth.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 40469.

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Date of creation: Aug 2012
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Handle: RePEc:pra:mprapa:40469

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Keywords: economic growth; endogenous market structure; patents; R&D subsidies;

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  2. O'Donoghue, Ted & Zweimüller, Josef, 1998. "Patents in a Model of Endogenous Growth," Economics Series, Institute for Advanced Studies 56, Institute for Advanced Studies.
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  21. Furukawa, Yuichi, 2007. "The protection of intellectual property rights and endogenous growth: Is stronger always better?," Journal of Economic Dynamics and Control, Elsevier, Elsevier, vol. 31(11), pages 3644-3670, November.
  22. Gene M. Grossman & Elhanan Helpman, 1989. "Quality Ladders in the Theory of Growth," NBER Working Papers 3099, National Bureau of Economic Research, Inc.
  23. Ai-Ting Goh & Jacques Olivier, 2002. "Optimal Patent Protection in a Two-Sector Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1191-1214, November.
  24. Segerstrom, Paul S & Anant, T C A & Dinopoulos, Elias, 1990. "A Schumpeterian Model of the Product Life Cycle," American Economic Review, American Economic Association, American Economic Association, vol. 80(5), pages 1077-91, December.
  25. Furukawa, Yuichi, 2010. "Intellectual property protection and innovation: an inverted-U relationship," Economics Letters, Elsevier, Elsevier, vol. 109(2), pages 99-101, November.
  26. Federico Etro, 2012. "Endogenous Market Structures and Welfare," Working Papers 2012_12, Department of Economics, University of Venice "Ca' Foscari".
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