Cumulative Innovation, Growth and Welfare-Improving Patent Policy
We construct a tractable general equilibrium model of cumulative innovation and growth, in which new ideas strictly improve upon frontier technologies, and productivity improvements are drawn in a stochastic manner. The presence of positive knowledge spillovers implies that the decentralized equilibrium features an allocation of labor to R&D activity that is strictly lower than the social planner’s benchmark, which suggests a role for patent policy. We focus on a “non-infringing inventive step” requirement, which stipulates the minimum improvement to the best patented technology that a new idea needs to make for it to be patentable and non-infringing. We establish that there exists a finite required inventive step that maximizes the rate of innovation, as well as a separate optimal required inventive step that maximizes welfare, with the former being strictly greater than the latter. These conclusions are robust to allowing for the availability of an additional instrument in the form of patent length policy.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +49 (89) 9224-0
Fax: +49 (89) 985369
Web page: http://www.cesifo.deEmail:
More information through EDIRC
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.:
- Ted O'Donoghue & Suzanne Scotchmer & Jacques-François Thisse, 1998.
"Patent Breadth, Patent Life, and the Pace of Technological Progress,"
Journal of Economics & Management Strategy,
Wiley Blackwell, vol. 7(1), pages 1-32, 03.
- O'DONOGHUE, Ted & SCOTCHMER, Suzanne & THISSE, Jacques-François, . "Patent breadth, patent life, and the pace of technological progress," CORE Discussion Papers RP -1314, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Denicolo, Vincenzo, 1996. "Patent Races and Optimal Patent Breadth and Length," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 249-65, September.
- Robert M. Hunt, 2004.
"Patentability, Industry Structure, and Innovation,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 52(3), pages 401-425, 09.
- Robert E. Lucas Jr. & Benjamin Moll, 2014.
"Knowledge Growth and the Allocation of Time,"
Journal of Political Economy,
University of Chicago Press, vol. 122(1), pages 1 - 51.
- Robert E. Lucas, Jr. & Benjamin Moll, 2011. "Knowledge Growth and the Allocation of Time," NBER Working Papers 17495, National Bureau of Economic Research, Inc.
- Benjamin Moll & Robert E. Lucas, 2011. "Knowledge Growth and the Allocation of Time," 2011 Meeting Papers 1030, Society for Economic Dynamics.
- Kwan, Yum K. & Lai, Edwin L. -C., 2003. "Intellectual property rights protection and endogenous economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 27(5), pages 853-873, March.
- Michele Boldrin & David K Levine, 2008. "Against Intellectual Monopoly," Levine's Bibliography 122247000000002371, UCLA Department of Economics.
- O'Donoghue, Ted & Zweimüller, Josef, 1998.
"Patents in a Model of Endogenous Growth,"
56, Institute for Advanced Studies.
- Costas Arkolakis, 2011.
"A Unified Theory of Firm Selection and Growth,"
NBER Working Papers
17553, National Bureau of Economic Research, Inc.
- repec:cup:cbooks:9780521879286 is not listed on IDEAS
- Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
- Jesse Perla & Christopher Tonetti, 2012.
"Equilibrium Imitation and Growth,"
12-03, New York University, Leonard N. Stern School of Business, Department of Economics.
- Sakakibara, Mariko & Branstetter, Lee, 2001. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 77-100, Spring.
- Paul Klemperer, 1990.
"How Broad Should the Scope of Patent Protection Be?,"
RAND Journal of Economics,
The RAND Corporation, vol. 21(1), pages 113-130, Spring.
- Klemperer, Paul, 1990. "How Broad Should the Scope of Patent Protection Be?," CEPR Discussion Papers 392, C.E.P.R. Discussion Papers.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
- Antonio Minniti & Carmelo Parello & Paul Segerstrom, 2013. "A Schumpeterian growth model with random quality improvements," Economic Theory, Springer, vol. 52(2), pages 755-791, March.
When requesting a correction, please mention this item's handle: RePEc:ces:ceswps:_4407. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Julio Saavedra)
If references are entirely missing, you can add them using this form.