The Inefficiency of Patents when R&D Projects are Imperfectly Correlated and Imitation Takes Time
In a realistic framework where the potential innovators'; research lines are imperfectly correlated and imitation takes some time, this paper studies an industry regulated by an authority that can subsidize the firms' R&D expenditures. By comparing the market equilibrium emerging when there is patent protection with the market equilibrium emerging without patents, the paper finds that social welfare is higher in the absence of patents. This result is driven by the fact that, without patents, more than one successful inventor may implement its discovery and enter the market, thus reducing the deadweight loss due to imperfect competition.
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Volume (Year): 167 (2011)
Issue (Month): 2 (June)
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Cohen, Wesley M & Levinthal, Daniel A, 1989. "Innovation and Learning: The Two Faces of R&D," Economic Journal, Royal Economic Society, vol. 99(397), pages 569-596, September.
- Maurer, Stephen M & Scotchmer, Suzanne, 2002.
"The Independent Invention Defence in Intellectual Property,"
London School of Economics and Political Science, vol. 69(276), pages 535-547, November.
- Scotchmer, suzanne, 1998. "The Independent-Invention Defense in Intellectual Property," Berkeley Olin Program in Law & Economics, Working Paper Series qt2s5174q8, Berkeley Olin Program in Law & Economics.
- Stephen M Maurer & Suzanne Scotchmer, 2003. "The Independent Invention Defense in Intellectual Property," Levine's Working Paper Archive 618897000000000544, David K. Levine.
- James Bessen & Eric Maskin, 2009. "Sequential innovation, patents, and imitation," RAND Journal of Economics, RAND Corporation, vol. 40(4), pages 611-635.
- James Bessen & Eric Maskin, 2006. "Sequential Innovation, Patents, and Imitation," Economics Working Papers 0025, Institute for Advanced Study, School of Social Science.
- Nancy T. Gallini, 2002. "The Economics of Patents: Lessons from Recent U.S. Patent Reform," Journal of Economic Perspectives, American Economic Association, vol. 16(2), pages 131-154, Spring.
- 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. Full references (including those not matched with items on IDEAS)
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