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Effects of Patent Length on R&D: A Quantitative DGE Analysis

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  • Chu, Angus C.

Abstract

This paper develops an R&D-growth model and calibrates the model to aggregate data of the US economy to quantify a structural relationship between patent length, R&D and consumption. Under parameter values that match the empirical flow-profit depreciation rate of patents and other key features of the US economy, extending the patent length beyond 20 years leads to a negligible increase in R&D despite equilibrium R&D underinvestment. In contrast, shortening the patent length leads to a significant reduction in R&D and consumption. Finally, this paper also analytically derives and quantifies a dynamic distortionary effect of patent length on capital investment.

Suggested Citation

  • Chu, Angus C., 2009. "Effects of Patent Length on R&D: A Quantitative DGE Analysis," MPRA Paper 16918, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:16918
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    More about this item

    Keywords

    innovation-driven growth; intellectual property rights; patent length; R&D;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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