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

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Abstract

This paper develops an R&D-growth model and calibrates the model to aggregate data of the US economy to quantify a structural relation ship 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 Institute of Economics, Academia Sinica, Taipei, Taiwan in its series IEAS Working Paper : academic research with number 09-A001.

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Length: 30 pages
Date of creation: Jan 2009
Date of revision: Dec 2009
Handle: RePEc:sin:wpaper:09-a001

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

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References

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  1. L. Rachel Ngai & Roberto M. Samaniego, 2009. "Accounting for Research and Productivity Growth Across Industries," CEP Discussion Papers dp0914, Centre for Economic Performance, LSE.
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Citations

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Cited by:
  1. 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.
  2. Chu, Angus C., 2011. "The welfare cost of one-size-fits-all patent protection," Journal of Economic Dynamics and Control, Elsevier, vol. 35(6), pages 876-890, June.
  3. Chu, Angus C. & Leung, Charles K.Y. & Tang, Edward, 2012. "Intellectual property rights, technical progress and the volatility of economic growth," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 749-756.
  4. Chu, Angus C., 2009. "Macroeconomic Effects of Intellectual Property Rights: A Survey," MPRA Paper 17342, University Library of Munich, Germany.
  5. Furukawa, Yuichi, 2010. "Intellectual property protection and innovation: an inverted-U relationship," Economics Letters, Elsevier, vol. 109(2), pages 99-101, November.

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