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Patent Protection, Innovation and Technology Licensing

Author

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  • Leonard F.S. Wang
  • Arijit Mukherjee

Abstract

type="main"> We show that the common wisdom suggesting higher investment in innovation under a stronger patent protection may not be true if the innovator can license its technology ex-post innovation. If the initial cost of production is high and the slope of the marginal cost of undertaking innovation is moderate, investment in innovation is maximised at a patent protection that is weaker than the strongest patent protection. Otherwise, strongest patent protection maximises investment in innovation. We also show that welfare is maximised neither at the strongest patent protection nor at the weakest patent protection but at an intermediate patent protection. Our results are important for patent policies.

Suggested Citation

  • Leonard F.S. Wang & Arijit Mukherjee, 2014. "Patent Protection, Innovation and Technology Licensing," Australian Economic Papers, Wiley Blackwell, vol. 53(3-4), pages 245-254, December.
    • Handle: RePEc:bla:ausecp:v:53:y:2014:i:3-4:p:245-254
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    References listed on IDEAS

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    Cited by:

    1. Shuai Niu, 2025. "Spillovers, licensing and welfare," Journal of Economics, Springer, vol. 144(1), pages 85-102, January.
    2. Leandro M. Meller, 2022. "Patent Length and Breadth as Policy Instruments: A Systematic Review of Recent Contributions to the Theory of Optimal Patent Design," Working Papers 192, Red Nacional de Investigadores en Economía (RedNIE).
    3. Tao Zhuang & Zhixia Zhou & Qingjun Li, 2021. "University‐industry‐government triple helix relationship and regional innovation efficiency in China," Growth and Change, Wiley Blackwell, vol. 52(1), pages 349-370, March.
    4. Arijit Mukherjee, 2014. "Patent protection under endogenous product differentiation," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 21(1), pages 78-93, March.

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