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Market Effects of Patent Reform in the US Semiconductor Industry

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  • Jeff Thurk

    (University of Notre Dame)

Abstract

I study the US semiconductor industry in the context of 1980s legal reform which strengthened intellectual property rights. Prior to the reform, the industry was highly concentrated in a few vertically integrated firms. Post reform, the entry of small design firms led to a fragmented industry composed of both specialty design firms and traditional production firms. I ask how much of this change in market structure can be attributed to patent reform and how much was the result of positive demand shocks from increased spending in the information technology industry. I introduce a structural model of innovation and patenting in which the entry rate of specialized design firms can increase due to either an increase in patent protection or demand. I fit the model to industry steady state and transitional dynamics using data on firm performance and patenting behavior. Policy experiments indicate the effects of stronger patent protection are minor compared with increased demand.

Suggested Citation

  • Jeff Thurk, 2013. "Market Effects of Patent Reform in the US Semiconductor Industry," 2013 Meeting Papers 1029, Society for Economic Dynamics.
    • Handle: RePEc:red:sed013:1029
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    References listed on IDEAS

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    4. Hall, Bronwyn H & Ziedonis, Rosemarie Ham, 2001. "The Patent Paradox Revisited: An Empirical Study of Patenting in the U.S. Semiconductor Industry, 1979-1995," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 101-128, Spring.
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    Cited by:

    1. Padmashree Gehl Sampath & Walter Park, 2019. "Do Patents Lead to Market Concentration and Excess Profits?," GDAE Working Papers 19-02, GDAE, Tufts University.
    2. Vivek Farias & Bar Ifrach & Gabriel Weintraub, 2012. "A Framework for Dynamic Oligopoly in Concentrated Industries," 2012 Meeting Papers 505, Society for Economic Dynamics.

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