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Patent Protecton and Strategic Delays in Technology Development: Implications for Econonmic Growth

Author

Listed:
  • Maggie Xiaoyang Chen

    () (Institute for International Economic Policy, George Washington University)

  • Murat Iyigun

    () (Department of Economics, University of Colorado/ Center for International Development, Harvard University/Instuitute for the Study of Labor (IZA))

Abstract

We present an endogenous growth nmodel in which both the investment to develop a new technology - that upgrades the quality of machines - and entry of imitators are determined endogenously. According to the model, how soon the new-technology machines in launched after the patent is granted is influenced by two factors: returns to scale in technology development and "strategic delays." Strategic delays in technology development are most likely to occur when earlier dates of success enable imitators to enter an industry, i.e., when imitation is swift and relatively cheap and/or patent protection is relatively lengthy. We then explore the link between the optimal patent lengthand economic growth, and find that the equlibrium investment in technology development and thus the expected rate of technological process exhibit an nverted U-shape relationship with respect to the legal patent length.

Suggested Citation

  • Maggie Xiaoyang Chen & Murat Iyigun, 2010. "Patent Protecton and Strategic Delays in Technology Development: Implications for Econonmic Growth," Working Papers 2010-19, The George Washington University, Institute for International Economic Policy.
  • Handle: RePEc:gwi:wpaper:2010-19
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    Citations

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    Cited by:

    1. Chu, Angus C. & Leung, Charles K.Y. & Tang, Edward, 2012. "Intellectual property rights, technical progress and the volatility of economic growth," Journal of Macroeconomics, Elsevier, vol. 34(3), pages 749-756.
    2. Chu, Angus C. & Pan, Shiyuan & Sun, Minjuan, 2012. "When does elastic labor supply cause an inverted-U effect of patents on innovation?," Economics Letters, Elsevier, vol. 117(1), pages 211-213.
    3. Chu, Angus C. & Pan, Shiyuan, 2013. "The Escape-Infringement Effect Of Blocking Patents On Innovation And Economic Growth," Macroeconomic Dynamics, Cambridge University Press, vol. 17(04), pages 955-969, June.
    4. Cysne, Rubens P. & Turchick, David, 2012. "Intellectual property rights protection and endogenous economic growth revisited," Journal of Economic Dynamics and Control, Elsevier, vol. 36(6), pages 851-861.
    5. Davis, Lewis S. & Şener, Fuat, 2012. "Private patent protection in the theory of Schumpeterian growth," European Economic Review, Elsevier, vol. 56(7), pages 1446-1460.
    6. Shiyuan Pan & Mengbo Zhang & Heng-fu Zou, 2013. "The Effects of Patent Protection: A Growth Model with Status Preference," CEMA Working Papers 574, China Economics and Management Academy, Central University of Finance and Economics.
    7. Reinan Ribeiro & David Turchick, 2014. "Optimal patent breadth in a horizontal innovation growth model," Working Papers, Department of Economics 2014_15, University of São Paulo (FEA-USP).
    8. Sorek, Gilad, 2011. "Patents and quality growth in OLG economy," Journal of Macroeconomics, Elsevier, vol. 33(4), pages 690-699.
    9. Shiyuan Pan & Mengbo Zhang & Heng-fu Zou, 2011. "Status Preference and the Effects of Patent Protection: Theory and Evidence," CEMA Working Papers 588, China Economics and Management Academy, Central University of Finance and Economics.

    More about this item

    Keywords

    technological change; intellectual property; economic growth;

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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