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Optimal Patent Length and Patent Width for an Economy with Creative Destruction and Non-Diversifiable Risk

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  • Tapio Palokangas

Abstract

This study examines optimal public policy in a product cycle model where R&D firms innovate and imitate and households face non-diversifiable risk. The government controls product cycles by two policy instruments: patent length, i.e. the expected time an innovation is imitated, and patent width, i.e. the innovator's profit after a successful imitation relative to that before. The main results are the following. An increase in patent length or patent width slows down economic growth. The more patient or the less risk averse the households, the longer and narrower the optimal patents.

Suggested Citation

  • Tapio Palokangas, 2009. "Optimal Patent Length and Patent Width for an Economy with Creative Destruction and Non-Diversifiable Risk," DEGIT Conference Papers c014_024, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c014_024
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Patents; imitation; innovation; product cycles;
    All these keywords.

    JEL classification:

    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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