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A dynamic stochastic analysis of international patent application and renewal processes

  • Deng, Yi
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    This paper formulates a dynamic stochastic model to examine the joint patent application and renewal behaviors under an international patent-protection regime. The framework makes it possible to utilize both the cross-sectional (multi-country application) and the time-series (patent renewal) dimensions of available international patenting data to estimate the private value of patent protection, and allows us to distinguish more aspects of patent returns. The evolution dynamics of the value of European patents in pharmaceutical and electronics industries are examined. Estimation results indicate that pharmaceutical patents are endowed with higher initial returns, thus their owners tend to seek patent protection in more countries than electronics patent holders. However, pharmaceutical patents become obsolete at a much faster pace than electronics patents, and consequently they have lower renewal rates and shorter lives.

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    File URL: http://www.sciencedirect.com/science/article/pii/S0167718711000440
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    Article provided by Elsevier in its journal International Journal of Industrial Organization.

    Volume (Year): 29 (2011)
    Issue (Month): 6 ()
    Pages: 766-777

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    Handle: RePEc:eee:indorg:v:29:y:2011:i:6:p:766-777
    DOI: 10.1016/j.ijindorg.2011.04.004
    Contact details of provider: Web page: http://www.elsevier.com/locate/inca/505551

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    1. McFadden, Daniel, 1989. "A Method of Simulated Moments for Estimation of Discrete Response Models without Numerical Integration," Econometrica, Econometric Society, vol. 57(5), pages 995-1026, September.
    2. Zvi Griliches, 1990. "Patent Statistics as Economic Indicators: A Survey," NBER Working Papers 3301, National Bureau of Economic Research, Inc.
    3. Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters, in: R&D, Patents, and Productivity, pages 73-88 National Bureau of Economic Research, Inc.
    4. Jean O. Lanjouw & Mark Schankerman, 2004. "Patent Quality and Research Productivity: Measuring Innovation with Multiple Indicators," Economic Journal, Royal Economic Society, vol. 114(495), pages 441-465, 04.
    5. Schankerman, Mark & Pakes, Ariel, 1986. "Estimates of the Value of Patent Rights in European Countries during the Post-1950 Period," Economic Journal, Royal Economic Society, vol. 96(384), pages 1052-76, December.
    6. Manuel Trajtenberg, 1990. "A Penny for Your Quotes: Patent Citations and the Value of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 172-187, Spring.
    7. Wesley M Cohen & Richard R Nelson & John P Walsh, 2003. "Protecting Their Intellectual Assets: Appropriability Conditions and Why U.S. Manufacturing Firms Patent (Or Not)," Levine's Working Paper Archive 618897000000000624, David K. Levine.
    8. Pakes, Ariel S, 1986. "Patents as Options: Some Estimates of the Value of Holding European Patent Stocks," Econometrica, Econometric Society, vol. 54(4), pages 755-84, July.
    9. Bronwyn H. Hall & Adam Jaffe & Manuel Trajtenberg, 2005. "Market Value and Patent Citations," RAND Journal of Economics, The RAND Corporation, vol. 36(1), pages 16-38, Spring.
    10. Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1987. "Appropriating the Returns from Industrial Research and Development," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 18(3), pages 783-832.
    11. Jean Olson Lanjouw, 1998. "Patent Protection in the Shadow of Infringement: Simulation Estimations of Patent Value," Review of Economic Studies, Oxford University Press, vol. 65(4), pages 671-710.
    12. repec:fth:harver:1473 is not listed on IDEAS
    13. Deng, Yi, 2007. "Private value of European patents," European Economic Review, Elsevier, vol. 51(7), pages 1785-1812, October.
    14. Pakes, Ariel & Pollard, David, 1989. "Simulation and the Asymptotics of Optimization Estimators," Econometrica, Econometric Society, vol. 57(5), pages 1027-57, September.
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