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Welfare Effects of Patent Protection in a Semi-Endogenous Growth Model

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  • Tatsuro Iwaisako

    (Graduate School of Economics, Osaka University)

Abstract

This paper examines how strengthening patent protection affects welfare in a nonscale qualityladder model, which was developed by Segerstrom (1998) and generalized by Li (2003). In the Segerstrom-Li model, patent protection creates no distortion in static allocation among the production sectors. In order to examine the welfare effects of strengthening patent protection adequately, we incorporate a competitive outside good into the Segerstrom-Li model. In the general model, we derive the welfare-maximizing degree of patent protection analytically by utilizing a linear approximation of the transition path. The result shows that the welfare-maximizing degree of patent protection is weaker when the market share of the competitive outside good is psitive than when it is zero. In other words, evaluating the welfare effect of patent protection without considering the static distortion which it creates leads to excessive patent protection.

Suggested Citation

  • Tatsuro Iwaisako, 2017. "Welfare Effects of Patent Protection in a Semi-Endogenous Growth Model," Discussion Papers in Economics and Business 17-27, Osaka University, Graduate School of Economics.
    • Handle: RePEc:osk:wpaper:1727
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    References listed on IDEAS

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    Cited by:

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    2. Lu, You-Xun & Lai, Ching-Chong, 2021. "Effects of patent policy on growth and inequality: A perspective of exogenous and endogenous quality improvements," MPRA Paper 111183, University Library of Munich, Germany.
    3. Chu, Angus C. & Kou, Zonglai & Wang, Xilin, 2023. "Class struggle in a Schumpeterian economy," China Economic Review, Elsevier, vol. 82(C).
    4. Ohki, Kazuyoshi, 2023. "Disruptive innovation by heterogeneous incumbents and economic growth: When do incumbents switch to new technology?," Journal of Mathematical Economics, Elsevier, vol. 107(C).
    5. You-Xun Lu & Ching-Chong Lai & Po-Yang Yu, 2024. "Effects of patent policy on growth and inequality: exogenous versus endogenous quality improvements," Journal of Economics, Springer, vol. 141(1), pages 1-28, January.
    6. Lu, You-Xun, 2022. "Interactive effects of monetary policy and patent protection: The role of endogenous innovation size," Economic Modelling, Elsevier, vol. 113(C).
    7. Angus C. Chu, 2022. "Patent policy and economic growth: A survey," Manchester School, University of Manchester, vol. 90(2), pages 237-254, March.

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    More about this item

    Keywords

    R&D; patent protection; welfare analysis; semi-endogenous growth;
    All these keywords.

    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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