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Effects of patent policy on growth and inequality: A perspective of exogenous and endogenous quality improvements

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  • Lu, You-Xun
  • Lai, Ching-Chong

Abstract

In this study, we explore the effects of patent protection on growth and inequality under exogenous versus endogenous quality improvements. With an exogenous step size of quality improvement, strengthening patent protection promotes economic growth; the strengthening in patent protection has an ambiguous effect on income inequality but a negative effect on consumption inequality. However, with an endogenous step size, the growth effect of patent protection becomes ambiguous; the strengthening in patent protection still has an ambiguous effect on income inequality but a negative effect on consumption inequality. Under our calibrated parameter values, we find that strengthening patent protection raises the degree of income inequality under exogenous quality improvements. In the case of endogenous quality improvements, our results show that the strengthening in patent protection has an inverted-U effect on economic growth; both income inequality and consumption inequality decrease with the strength of patent protection.

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  • Lu, You-Xun & Lai, Ching-Chong, 2021. "Effects of patent policy on growth and inequality: A perspective of exogenous and endogenous quality improvements," MPRA Paper 111183, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:111183
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    More about this item

    Keywords

    innovation; patent protection; economic growth; inequality;
    All these keywords.

    JEL classification:

    • D30 - Microeconomics - - Distribution - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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