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Quantifying the Effects of Patent Protection on Innovation, Imitation, Growth, and Aggregate Productivity

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  • Pedro Bento

    (Texas A&M University, Department of Economics)

Abstract

I develop a general equilibrium model in which patent protection affects sequential innovation, original innovation, and imitation. Protection increases the cost of working around existing patents, but imposes costs disproportionately for innovators and imitators. Depending on these relative costs, protection can in theory increase or decrease markups, imitation, long-run growth, and aggregate productivity. Using data from several different sources, I calibrate the model and quantitatively assess the effects of patent protection in practice. I find that weakening protection in the U.S. would lead to no change in markups and imitation, no change in long-run growth, a more than doubling of the number of firms, and an increase in aggregate productivity of 11 percent.

Suggested Citation

  • Pedro Bento, 2015. "Quantifying the Effects of Patent Protection on Innovation, Imitation, Growth, and Aggregate Productivity," Working Papers 20150801-001, Texas A&M University, Department of Economics.
    • Handle: RePEc:txm:wpaper:20150801-001
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    File URL: https://pvsessions.tamu.edu/RePEc/bentopatents.pdf
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    References listed on IDEAS

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    1. Furukawa, Yuichi & Lai, Tat-kei & Sato, Kenji, 2019. "Love of Novelty: A Source of Innovation-Based Growth... or Underdevelopment Traps?," MPRA Paper 92915, University Library of Munich, Germany.

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    More about this item

    Keywords

    patent protection; firm size; productivity; innovation; imitation; competition;
    All these keywords.

    JEL classification:

    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity

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