Cumulative Innovation, Growth and Welfare-Improving Patent Policy
We construct a tractable general equilibrium model of cumulative innovation and growth, in which new ideas strictly improve upon frontier technologies, and productivity improvements are drawn in a stochastic manner. The presence of positive knowledge spillovers implies that the decentralized equilibrium features an allocation of labor to R&D activity that is strictly lower than the social planner's benchmark, which suggests a role for patent policy. We focus on a "non-infringing inventive step" requirement, which stipulates the minimum improvement to the best patented technology that a new idea needs to make for it to be patentable and non-infringing. We establish that there exists a finite required inventive step that maximizes the rate of innovation, as well as a separate optimal required inventive step that maximizes welfare, with the former being strictly greater than the latter. These conclusions are robust to allowing for the availability of an additional instrument in the form of patent length policy.
|Date of creation:||2013|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: http://www.EconomicDynamics.org/society.htm
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Jesse Perla & Christopher Tonetti, 2012.
"Equilibrium Imitation and Growth,"
12-03, New York University, Leonard N. Stern School of Business, Department of Economics.
- Robert M. Hunt, 2004.
"Patentability, Industry Structure, and Innovation,"
Journal of Industrial Economics,
Wiley Blackwell, vol. 52(3), pages 401-425, 09.
- Benjamin Moll & Robert E. Lucas, 2011.
"Knowledge Growth and the Allocation of Time,"
2011 Meeting Papers
1030, Society for Economic Dynamics.
- Klemperer, Paul, 1990.
"How Broad Should the Scope of Patent Protection Be?,"
CEPR Discussion Papers
392, C.E.P.R. Discussion Papers.
- Paul Klemperer, 1990. "How Broad Should the Scope of Patent Protection Be?," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 113-130, Spring.
- Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
- Costas Arkolakis, 2009.
"A Unified Theory of Firm Selection and Growth,"
CESifo Working Paper Series
2679, CESifo Group Munich.
- repec:cup:cbooks:9780521879286 is not listed on IDEAS
- Sakakibara, Mariko & Branstetter, Lee, 2001. "Do Stronger Patents Induce More Innovation? Evidence from the 1988 Japanese Patent Law Reforms," RAND Journal of Economics, The RAND Corporation, vol. 32(1), pages 77-100, Spring.
- Antonio Minniti & Carmelo Parello & Paul Segerstrom, 2013. "A Schumpeterian growth model with random quality improvements," Economic Theory, Springer, vol. 52(2), pages 755-791, March.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, June.
- Jerry R. Green & Suzanne Scotchmer, 1995.
"On the Division of Profit in Sequential Innovation,"
RAND Journal of Economics,
The RAND Corporation, vol. 26(1), pages 20-33, Spring.
- Green, J.R. & Scotchmer, S., 1993. "On the Division of Profit in Sequential Innovation," Harvard Institute of Economic Research Working Papers 1638, Harvard - Institute of Economic Research.
- Denicolo, Vincenzo, 1996. "Patent Races and Optimal Patent Breadth and Length," Journal of Industrial Economics, Wiley Blackwell, vol. 44(3), pages 249-65, September.
- Jonathan Eaton & Samuel Kortum, 2001.
"Technology, Trade, and Growth: A Unified Fremework,"
Boston University - Department of Economics - The Institute for Economic Development Working Papers Series
dp-110, Boston University - Department of Economics.
- Eaton, Jonathan & Kortum, Samuel, 2001. "Technology, trade, and growth: A unified framework," European Economic Review, Elsevier, vol. 45(4-6), pages 742-755, May.
- Kwan, Yum K. & Lai, Edwin L. -C., 2003. "Intellectual property rights protection and endogenous economic growth," Journal of Economic Dynamics and Control, Elsevier, vol. 27(5), pages 853-873, March.
- Michele Boldrin & David K Levine, 2008. "Against Intellectual Monopoly," Levine's Bibliography 122247000000002371, UCLA Department of Economics.
- repec:fth:bosecd:110 is not listed on IDEAS
When requesting a correction, please mention this item's handle: RePEc:red:sed013:854. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christian Zimmermann)
If references are entirely missing, you can add them using this form.