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

  • 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))

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.

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File URL: http://www.gwu.edu/~iiep/assets/docs/papers/Chen_IIEPWP2010-19.pdf
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Paper provided by The George Washington University, Institute for International Economic Policy in its series Working Papers with number 2010-19.

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Length: 37 pages
Date of creation: Sep 2010
Date of revision:
Publication status: Forthcoming in Southern Economic Journal/ University of Colorado Working Paper No. 04-09
Handle: RePEc:gwi:wpaper:2010-19
Contact details of provider: Web page: http://www.gwu.edu/~iiep/
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