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Effects of patent policy on growth and inequality: exogenous versus endogenous quality improvements

Author

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  • You-Xun Lu

    (Nanjing University of Information Science and Technology
    Nanjing University of Information Science and Technology)

  • Ching-Chong Lai

    (Academia Sinica
    National Cheng Chi University
    National Sun Yat-Sen University
    National Taipei University)

  • Po-Yang Yu

    (Academia Sinica)

Abstract

This study explores the implications of patent protection on growth and inequality under exogenous versus endogenous quality improvements. Our analysis shows that the effects of strengthening patent protection under an endogenous innovation size can be quite different from those under an exogenous innovation size. Under our calibrated parameter values, we find that strengthening patent protection promotes economic growth, raises income inequality, and decreases consumption inequality under exogenous quality improvements. However, in the case of endogenous quality improvements, strengthening patent protection generates an inverted-U effect on economic growth; both income inequality and consumption inequality decrease with the strength of patent protection.

Suggested Citation

  • You-Xun Lu & Ching-Chong Lai & Po-Yang Yu, 2024. "Effects of patent policy on growth and inequality: exogenous versus endogenous quality improvements," Journal of Economics, Springer, vol. 141(1), pages 1-28, January.
    • Handle: RePEc:kap:jeczfn:v:141:y:2024:i:1:d:10.1007_s00712-023-00843-w
    DOI: 10.1007/s00712-023-00843-w
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    More about this item

    Keywords

    Innovation; Patent protection; Economic growth; Inequality;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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