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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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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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