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Competition, Imitation, and R&D Productivity in a Growth Model with Industry-Specific Patent Protection

Listed author(s):
  • Mosel Malte

    (University of Passau and Max Planck Institute for Intellectual Property and Competition Law)

Registered author(s):

    Recent empirical studies suggest a need for a flexible patent regime responding to industry differences. In practice, industry-specific modifications of patent length already exist but lack theoretical foundation. This paper intends to make up for this neglect by scrutinizing in what direction industry characteristics influence optimal patent length. It is found that patents ought to be shorter, the more intense competition, the higher R&D productivity, and the more intricate reverse engineering in an industry are. Unlike similar Schumpeterian growth models, this model assumes Cournot competition and introduces an empirically substantiated measure of industry differences in the ability to catch up with a technological leader. It is found that for most empirically plausible cases the familiar inverted-U relation between patent length and growth carries over to the Cournot set-up.

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    Article provided by De Gruyter in its journal Review of Law & Economics.

    Volume (Year): 7 (2011)
    Issue (Month): 2 (December)
    Pages: 601-652

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    Handle: RePEc:bpj:rlecon:v:7:y:2011:i:2:n:10
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    1. Winfried KOENIGER & Omar LICANDRO, 2004. "Substitutability and Competition in the Dixit-Stiglitz Model," Economics Working Papers ECO2004/05, European University Institute.
    2. Boone, Jan & van der Wiel, Henry & van Ours, Jan C, 2007. "How (not) to measure competition," CEPR Discussion Papers 6275, C.E.P.R. Discussion Papers.
    3. Gerard Llobet & Hugo Hopenhayn & Matthew Mitchell, 2003. "Rewarding Sequential Innovators: Prizes, Patents and Buyouts," Levine's Working Paper Archive 618897000000000682, David K. Levine.
    4. Nickell, Stephen J, 1996. "Competition and Corporate Performance," Journal of Political Economy, University of Chicago Press, vol. 104(4), pages 724-746, August.
    5. Christopher Budd & Christopher Harris & John Vickers, 1993. "A Model of the Evolution of Duopoly: Does the Asymmetry between Firms Tend to Increase or Decrease?," Review of Economic Studies, Oxford University Press, vol. 60(3), pages 543-573.
    6. Mehra, Rajnish & Prescott, Edward C., 1985. "The equity premium: A puzzle," Journal of Monetary Economics, Elsevier, vol. 15(2), pages 145-161, March.
    7. O'DONOGHUE, Ted & SCOTCHMER, Suzanne & THISSE, Jacques-François, "undated". "Patent breadth, patent life, and the pace of technological progress," CORE Discussion Papers RP 1314, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    8. William S. Comanor, 1967. "Market Structure, Product Differentiation, and Industrial Research," The Quarterly Journal of Economics, Oxford University Press, vol. 81(4), pages 639-657.
    9. Edwin Mansfield, 1986. "Patents and Innovation: An Empirical Study," Management Science, INFORMS, vol. 32(2), pages 173-181, February.
    10. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-918, December.
    11. Paul Klemperer, 1990. "How Broad Should the Scope of Patent Protection Be?," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 113-130, Spring.
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