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

  • Chu, Angus C.

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.

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File URL: http://mpra.ub.uni-muenchen.de/16918/1/MPRA_paper_16918.pdf
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Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 16918.

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Date of creation: Aug 2009
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Handle: RePEc:pra:mprapa:16918
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  1. Gene M. Grossman & Edwin L.-C. Lai, 2002. "International Protection of Intellectual Property," CESifo Working Paper Series 790, CESifo Group Munich.
  2. L. Rachel Ngai & Roberto M. Samaniego, 2009. "Accounting for research and productivity growth across industries," LSE Research Online Documents on Economics 25496, London School of Economics and Political Science, LSE Library.
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  10. Aghion, Philippe & Howitt, Peter, 1992. "A Model of Growth Through Creative Destruction," Scholarly Articles 12490578, Harvard University Department of Economics.
  11. Futagami, Koichi & Iwaisako, Tatsuro, 2007. "Dynamic analysis of patent policy in an endogenous growth model," Journal of Economic Theory, Elsevier, vol. 132(1), pages 306-334, January.
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  20. Laitner, John & Stolyarov, Dmitriy, 2004. "Aggregate returns to scale and embodied technical change: theory and measurement using stock market data," Journal of Monetary Economics, Elsevier, vol. 51(1), pages 191-233, January.
  21. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-85, May.
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  25. Jones, Charles I, 1995. "Time Series Tests of Endogenous Growth Models," The Quarterly Journal of Economics, MIT Press, vol. 110(2), pages 495-525, May.
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  28. Tandon, Pankaj, 1982. "Optimal Patents with Compulsory Licensing," Journal of Political Economy, University of Chicago Press, vol. 90(3), pages 470-86, June.
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  30. repec:hal:journl:hal-00460082 is not listed on IDEAS
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