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The Crowding-Out Effects of Long Duration of Patents

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  • Chien-fu Chou
  • Oz Shy

Abstract

In this article we demonstrate how a long duration of patents affects investment in new product development. We construct an overlapping-generations model of saving, investment, and product innovation and show that a long duration of patents results in a high aggregate value of monopoly firms that compete for the younger generation's savings with investment in new product development. We analyze the crowding-out effects of long duration of patents and their implications for individual's welfare under different patent regimes.

Suggested Citation

  • Chien-fu Chou & Oz Shy, 1993. "The Crowding-Out Effects of Long Duration of Patents," RAND Journal of Economics, The RAND Corporation, vol. 24(2), pages 304-312, Summer.
  • Handle: RePEc:rje:randje:v:24:y:1993:i:summer:p:304-312
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    Cited by:

    1. Iwaisako, Tatsuro & Tanaka, Hitoshi, 2017. "Product cycles and growth cycles," Journal of International Economics, Elsevier, vol. 105(C), pages 22-40.
    2. Gerlagh, Reyer & Kverndokk, Snorre & Rosendahl, Knut Einar, 2014. "The optimal time path of clean energy R&D policy when patents have finite lifetime," Journal of Environmental Economics and Management, Elsevier, vol. 67(1), pages 2-19.

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