Some Simple Economics of Patent Protection for Complex Technologies

Vincenzo Denicolo' () and Piercarlo Zanchettin

No 13087, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyze patent protection when innovative technologies are "complex" in that they involve sequential and complementary innovations. We argue that complexity affects the classic Nordhaus trade-off between innovation and static monopoly distortions. We parametrize the degree of sequentiality and that of complementarity and show that the optimal level of patent protection increases with both. We also address the issue of the optimal division of profit among different innovators.

Keywords: Sequential innovation; Complementarity; Patent design; Elasticity of the supply of inventions; Division of profit (search for similar items in EconPapers)
JEL-codes: O30 O40 (search for similar items in EconPapers)
Date: 2018-07
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-mic and nep-tid
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