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Patentability, Industry Structure and Innovation

  • Robert M Hunt

This paper presents a model of sequential innovation in which industry structure is endogenous and a standard of patentability determines the proportion of all inventions that qualify for protection (in U.S. patent law, this standard is called nonobviousness ; in Europe, it is called the inventive step ). The rate of innovation initially rises as this standard is raised from very low levels, but eventually falls as the standard is raised to very high levels. Hence, there is a unique patentability standard that maximizes the rate of innovation. Surprisingly, this critical standard is more stringent for industries disposed to innovate rapidly. The model suggests a number of important implications for patent policy. Copyright Blackwell Publishing Ltd. 2004.

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Paper provided by David K. Levine in its series Levine's Working Paper Archive with number 618897000000000689.

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Date of creation: 31 Oct 2003
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Handle: RePEc:cla:levarc:618897000000000689
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