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R&D and the Patent Premium

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  • Ashish Arora
  • Marco Ceccagnoli
  • Wesley M. Cohen

Abstract

We analyze the effect of patenting on R&D with a model linking a firm's R&D effort with its decision to patent, recognizing that R&D and patenting affect one another and are both driven by many of the same factors. Using survey data for the U.S. manufacturing sector, we estimate the increment to the value of an innovation realized by patenting it, and then analyze the effect on R&D of changing that premium. Although patent protection is found to provide a positive premium on average in only a few industries, our results also imply that it stimulates R&D across almost all manufacturing industries, with the magnitude of that effect varying substantially.

Suggested Citation

  • Ashish Arora & Marco Ceccagnoli & Wesley M. Cohen, 2003. "R&D and the Patent Premium," NBER Working Papers 9431, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:9431
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    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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