Peanut Butter Patents Versus the New Economy: Does the Increased Rate of Patenting Signal More Invention or Just Lower Standards?
The rate of patenting in the U.S. has exploded in the last half of the 1990s. It is widely believed that the increase in patent grants is at least partly a result of the apparent decline in examination standards. There has been little exploration, however, of the theoretical prediction that a decline in examination standards would itself induce an increase in dubious applications. We estimate a simultaneous equation model, in which the number applications depend on the perceived rigor of the examination process, amongst other things and patent grants depend on the number and quality of applications. We have a multi-dimensional panel, with data on the application and grant rates for each year, countries of origin, and jurisdiction of examination. We find that a ‘loosening’ of the grants standards by one percent increases applications by 8 percent in the full sample and by 3 percent in the Non-US sample. This result points to the importance of accounting for the endogenous application response particularly for the US case. Controlling for this effect, we find that application elasticity of grants is around 0.124 for the full sample and 0.145 for the Non-US one, and is declining over time in both. In addition countries whose patent applications are more likely to be successful in the US are more likely to be successful in other countries as well. These findings confirm that inventors respond to increased likelihood of success at the patent office by filing more applications, but also confirm earlier findings that the surge in patenting in the US in the last two decades appears to be driven to a significant extent by an increase in the underlying invention rate.
References listed on IDEAS
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.:
- Cohen, Wesley M. & Levin, Richard C., 1989. "Empirical studies of innovation and market structure," Handbook of Industrial Organization, in: R. Schmalensee & R. Willig (ed.), Handbook of Industrial Organization, edition 1, volume 2, chapter 18, pages 1059-1107 Elsevier.
- Kortum, Samuel & Lerner, Josh, 1998.
"Stronger protection or technological revolution: what is behind the recent surge in patenting?,"
Carnegie-Rochester Conference Series on Public Policy,
Elsevier, vol. 48(1), pages 247-304, June.
- Samuel Kortum & Josh Lerner, 1997. "Stronger Protection or Technological Revolution: What is Behind the Recent Surge in Patenting?," NBER Working Papers 6204, National Bureau of Economic Research, Inc.
- Phillip B. Levine & David J. Zimmerman, 2000.
"Children's Welfare Exposure and Subsequent Development,"
JCPR Working Papers
130, Northwestern University/University of Chicago Joint Center for Poverty Research.
- Levine, Phillip B. & Zimmerman, David J., 2005. "Children's welfare exposure and subsequent development," Journal of Public Economics, Elsevier, vol. 89(1), pages 31-56, January.
- Phillip B. Levine & David J. Zimmerman, 2000. "Children's Welfare Exposure and Subsequent Development," NBER Working Papers 7522, National Bureau of Economic Research, Inc.
- Kamien, Morton I & Schwartz, Nancy L, 1975. "Market Structure and Innovation: A Survey," Journal of Economic Literature, American Economic Association, vol. 13(1), pages 1-37, March.
- Josh Lerner, 2003.
"150 Years of Patent Protection,"
Levine's Working Paper Archive
618897000000000587, David K. Levine.
- Carl Shapiro, 2003.
"Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting,"
Law and Economics
- Carl Shapiro, 2001. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting," NBER Chapters, in: Innovation Policy and the Economy, Volume 1, pages 119-150 National Bureau of Economic Research, Inc.
- Carl Shapiro, 2004. "Navigating the Patent Thicket: Cross Licenses, Patent Pools and Standard Setting," Levine's Working Paper Archive 122247000000000539, David K. Levine.
- Shapiro, Carl, 2000. "Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting," Competition Policy Center, Working Paper Series qt4hs5s9wk, Competition Policy Center, Institute for Business and Economic Research, UC Berkeley.
- Lichtenberg, Frank R, 1987. "The Effect of Government Funding on Private Industrial Research and Development: A Re-assessment," Journal of Industrial Economics, Wiley Blackwell, vol. 36(1), pages 97-104, September.
- Edwin Mansfield & Lorne Switzer, 1984. "Effects of Federal Support on Company-Financed R and D: The Case of Energy," Management Science, INFORMS, vol. 30(5), pages 562-571, May.
- Adam B. Jaffe & Manuel Trajtenberg, 2005. "Patents, Citations, and Innovations: A Window on the Knowledge Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 026260065x.
- Lichtenberg, Frank R, 1984. "The Relationship between Federal Contract R&D and Company R&D," American Economic Review, American Economic Association, vol. 74(2), pages 73-78, May.
- Lippman, Steven A & McCall, John J, 1986. "An Operational Measure of Liquidity," American Economic Review, American Economic Association, vol. 76(1), pages 43-55, March.
- Adam B. Jaffe, 1999.
"The U.S. Patent System in Transition: Policy Innovation and the Innovation Process,"
NBER Working Papers
7280, National Bureau of Economic Research, Inc.
- Jaffe, Adam B., 2000. "The U.S. patent system in transition: policy innovation and the innovation process," Research Policy, Elsevier, vol. 29(4-5), pages 531-557, April.
- Suzanne Scotchmer, 1991. "Standing on the Shoulders of Giants: Cumulative Research and the Patent Law," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 29-41, Winter.
- Iain M. Cockburn & Samuel Kortum & Scott Stern, 2002. "Are All Patent Examiners Equal? The Impact of Examiner Characteristics," NBER Working Papers 8980, National Bureau of Economic Research, Inc.
- Jaffe, Adam B, 1986.
"Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits, and Market Value,"
American Economic Review,
American Economic Association, vol. 76(5), pages 984-1001, December.
- Adam B. Jaffe, 1986. "Technological Opportunity and Spillovers of R&D: Evidence from Firms' Patents, Profits and Market Value," NBER Working Papers 1815, National Bureau of Economic Research, Inc.
- Richard C. Levin & Alvin K. Klevorick & Richard R. Nelson & Sidney G. Winter, 1988. "Appropriating the Returns from Industrial R&D," Cowles Foundation Discussion Papers 862, Cowles Foundation for Research in Economics, Yale University.
- Kortum, Samuel & Lerner, Josh, 1999. "What is behind the recent surge in patenting?1," Research Policy, Elsevier, vol. 28(1), pages 1-22, January.
- Lichtenberg, Frank R, 1988. "The Private R&D Investment Response to Federal Design and Technical Competitions," American Economic Review, American Economic Association, vol. 78(3), pages 550-559, June.
- Lester G. Telser, 1982. "A Theory of Innovation and Its Effects," Bell Journal of Economics, The RAND Corporation, vol. 13(1), pages 69-92, Spring.
- Janusz A. Ordover, 1991. "A Patent System for Both Diffusion and Exclusion," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 43-60, Winter.
When requesting a correction, please mention this item's handle: RePEc:wpa:wuwpio:0504013. 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: (EconWPA)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.