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Effects of patent length on R&D: a quantitative DGE analysis

  • Angus Chu


This paper develops an R&D-growth model and calibrates the model to aggregate data of the US economy to quantify a structural relationship between patent length, R&D and consumption. Under parameter values that match the empirical flow-profit depreciation rate of patents and other key features of the US economy, extending the patent length beyond 20 years leads to a negligible increase in R&D despite equilibrium R&D underinvestment. In contrast, shortening the patent length leads to a significant reduction in R&D and consumption. Finally, this paper also analytically derives and quantifies a dynamic distortionary effect of patent length on capital investment.

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Article provided by Springer in its journal Journal of Economics.

Volume (Year): 99 (2010)
Issue (Month): 2 (March)
Pages: 117-140

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Handle: RePEc:kap:jeczfn:v:99:y:2010:i:2:p:117-140
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