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Patent policy at a tipping point: Why stronger patent protection may not foster economic growth

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  • Bom, Pedro R.D.
  • Stojanovikj, Martin

Abstract

Empirical evidence suggests that stronger patent protection has, at most, a modest positive effect on economic growth. However, Schumpeterian growth models yield a wide range of predictions, ranging from positive to significantly negative effects on economic growth. In this study, we develop a Schumpeterian growth model incorporating an endogenous innovation scale, a generalized innovation function integrating R&D lab equipment and labor-embodied technical knowledge, and an effect related to the complexity of innovation. Plausible calibrations suggest that, in accordance with the evidence, a typical OECD economy is situated near the peak of an inverted-U-shaped curve, wherein enhanced patent protection has little or no effect on growth. In economies with high innovation arrival rates or large markups, the effect may even be negative.

Suggested Citation

  • Bom, Pedro R.D. & Stojanovikj, Martin, 2025. "Patent policy at a tipping point: Why stronger patent protection may not foster economic growth," Economic Modelling, Elsevier, vol. 153(C).
    • Handle: RePEc:eee:ecmode:v:153:y:2025:i:c:s0264999325003517
    DOI: 10.1016/j.econmod.2025.107356
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    Keywords

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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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