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Sequential R&D and Blocking Patents in the Dynamics of Growth

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  • Cozzi, Guido

    ()

  • Galli, Silvia

    ()

Abstract

The incentives to conduct basic or applied research play a central role for economic growth. How does increasing early innovation appropriability affect basic research, applied research, innovation and growth? In a common law system an explicitly dynamic macroeconomic analysis is appropriate. This paper analyzes the macroeconomic effects of patent protection by incorporating a twostage cumulative innovation structure into a quality-ladder growth model with skill acquisition. We focus on two issues: (a) the over-protection vs. the under-protection of intellectual property rights in basic research; (b) the evolution of jurisprudence shaping the bargaining power of the upstream innovators. We show that the dynamic general equilibrium interactions may seriously mislead the empirical assessment of the growth effects of IPR policy: stronger protection of upstream innovation always looks bad in the short- and possibly medium-run. We also provide a simple "rule of thumb" indicator of the basic researcher bargaining power.

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Bibliographic Info

Paper provided by University of St. Gallen, School of Economics and Political Science in its series Economics Working Paper Series with number 1305.

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Length: 53 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:usg:econwp:2013:05

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Keywords: Endogenous Growth; Basic and Applied Research; Endogenous Technological Change; Common Law.;

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