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On Knowledge Diffusion, Patents Lifetime and Innovation Based Endogenous Growth

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  • Philippe Michel
  • Jules Nyssen

Abstract

This paper analyzes the macroeconomic effects of the patents system within the framework of an endogenous growth model with new products development. We assume that patents not only represent a commercial protection for innovators but also entail a partial property right on information. Therefore, increasing the patents lifetime increases the profitability of a given research and development project but also decreases the knowledge spillovers that play a crucial role in the growth process. We then show that when the instantaneous diffusion of knowledge is "low", growth is maximized by a finite patents lifetime while this role is devoted to infinitely lived patents are growth-maximizing when the instantaneous diffusion of knowledge is "high". Furthermore, in the former case, the optimal patents lifetime is also finite and shorter than the growth maximizing one. The design of an optimal patents policy only holds in a second best analysis. When the resource allocation is determined by a central planner maximizing the utility of a representative agent, social welfare is always higher than in the decentralized case.

Suggested Citation

  • Philippe Michel & Jules Nyssen, 1998. "On Knowledge Diffusion, Patents Lifetime and Innovation Based Endogenous Growth," Annals of Economics and Statistics, GENES, issue 49-50, pages 77-103.
  • Handle: RePEc:adr:anecst:y:1998:i:49-50:p:77-103
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    Cited by:

    1. Ryo Horii & Tatsuro Iwaisako, 2007. "Economic Growth with Imperfect Protection of Intellectual Property Rights," Journal of Economics, Springer, vol. 90(1), pages 45-85, January.
    2. repec:seg:012016:v:3:y:2018:i:1:p:77-95 is not listed on IDEAS
    3. MABROUKI, Mohamed, 2017. "Le brevet instrument de politique économique pour promouvoir l’innovation au profit de la croissance : discussion théorique
      [The patent economic policy instrument to promote innovation for growth:
      ," MPRA Paper 80317, University Library of Munich, Germany.
    4. Laussel, Didier & Nyssen, Jules, 1999. "Endogenous growth and multiplicity due to finite patents' lifetime," Economics Letters, Elsevier, vol. 63(2), pages 167-173, May.
    5. Mabrouki, Mohamed, 2018. "Le brevet : un instrument efficace pour promouvoir l’innovation au profit de la croissance ou un mal nécessaire ?
      [Patent: an effective instrument to promote innovation for the benefit of growth or
      ," MPRA Paper 85752, University Library of Munich, Germany.
    6. repec:seg:012016:v:3:y:2018:i:1:p:57-75 is not listed on IDEAS

    More about this item

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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