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The Escape-Infringement Effect Of Blocking Patents On Innovation And Economic Growth

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  • Chu, Angus C.
  • Pan, Shiyuan

Abstract

This study develops a Schumpeterian growth model to analyze the effects of different patent instruments on innovation. We first analyze patent breadth, which captures the traditional positive effect of patent rights on innovation. Then, we consider a profit-division rule between entrants and incumbents. Given the division of profit, increasing the share of profit assigned to incumbents reduces entrants' incentives for innovation. This aspect of blocking patents captures the recently proposed negative effect of patent rights on innovation. Finally, blocking patents generate a nonmonotonic effect on innovation when the step size of innovation is endogenous because of a novel escape-infringement effect. Calibrating the model to aggregate data, we find that a marginal increase in the blocking effect of patent protection is likely to enhance economic growth.

Suggested Citation

  • Chu, Angus C. & Pan, Shiyuan, 2013. "The Escape-Infringement Effect Of Blocking Patents On Innovation And Economic Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 17(4), pages 955-969, June.
  • Handle: RePEc:cup:macdyn:v:17:y:2013:i:04:p:955-969_00
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    Cited by:

    1. Jerbashian, Vahagn, 2021. "Intellectual Property And Product Market Competition Regulations In A Model With Two R&D Performing Sectors," Macroeconomic Dynamics, Cambridge University Press, vol. 25(1), pages 59-80, January.
    2. Kiedaisch, Christian, 2015. "Intellectual property rights in a quality-ladder model with persistent leadership," European Economic Review, Elsevier, vol. 80(C), pages 194-213.
    3. Chu, Angus C. & Cozzi, Guido & Galli, Silvia, 2012. "Does intellectual monopoly stimulate or stifle innovation?," European Economic Review, Elsevier, vol. 56(4), pages 727-746.
    4. Suzuki, Keishun, 2020. "Patent Protection, Optimal Licensing, And Innovation With Endogenous Entry," Macroeconomic Dynamics, Cambridge University Press, vol. 24(8), pages 2033-2059, December.
    5. Keiichi Kishi, 2014. "A patentability requirement and industries targeted by R&D," Discussion Papers in Economics and Business 14-27-Rev., Osaka University, Graduate School of Economics, revised Oct 2014.
    6. Yibai Yang, 2018. "On the Optimality of IPR Protection with Blocking Patents," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 27, pages 205-230, January.
    7. Angus C. Chu & Guido Cozzi & Haichao Fan & Shiyuan Pan & Mengbo Zhang, 2020. "Do Stronger Patents Stimulate or Stifle Innovation? The Crucial Role of Financial Development," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 52(5), pages 1305-1322, August.
    8. Niwa, Sumiko, 2016. "Patent claims and economic growth," Economic Modelling, Elsevier, vol. 54(C), pages 377-381.
    9. Sumiko Niwa, 2018. "Effects of a blocking patent on R&D with endogenous survival activities," Journal of Economics, Springer, vol. 125(3), pages 263-277, November.
    10. Shiyuan Pan & Tailong Li & Heng-fu Zou, 2012. "Patent Protection, Technological Change and Wage Inequality: Theory," CEMA Working Papers 537, China Economics and Management Academy, Central University of Finance and Economics.
    11. Chu, Angus C., 2020. "Patent Policy and Economic Growth: A Survey," MPRA Paper 103643, University Library of Munich, Germany.
    12. Chu, Angus C. & Fan, Haichao & Shen, Guobing & Zhang, Xun, 2018. "Effects of international trade and intellectual property rights on innovation in China," Journal of Macroeconomics, Elsevier, vol. 57(C), pages 110-121.

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    More about this item

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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