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Econometric evidence on the depreciation of innovations

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  • de Rassenfosse, Gaétan
  • Jaffe, Adam B.

Abstract

This paper presents estimates of the depreciation rate of innovations using survey data on revenues associated with Australian patents. Its novelty is twofold. First, it relies on direct observation of the revenue streams of inventions. This is in sharp contrast with previous studies, which all rely on models based on indirect observation and require strong identifying assumptions. Second, it presents estimates of the effect of patent protection on the depreciation rate. Results suggest that the depreciation rate is in 2–7% range. Inventions for which a patent is granted are associated with a 1–2 percentage point reduction in the depreciation rate.

Suggested Citation

  • de Rassenfosse, Gaétan & Jaffe, Adam B., 2018. "Econometric evidence on the depreciation of innovations," European Economic Review, Elsevier, vol. 101(C), pages 625-642.
  • Handle: RePEc:eee:eecrev:v:101:y:2018:i:c:p:625-642
    DOI: 10.1016/j.euroecorev.2017.11.005
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    References listed on IDEAS

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    More about this item

    Keywords

    Appropriability; Intangible asset; Obsolescence; Depreciation; Returns to R&D; Weak patent;

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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