Effects of patent policy on growth and inequality: A perspective of exogenous and endogenous quality improvements

You-Xun Lu and Ching-chong Lai

MPRA Paper from University Library of Munich, Germany

Abstract: In this study, we explore the effects of patent protection on growth and inequality under exogenous versus endogenous quality improvements. With an exogenous step size of quality improvement, strengthening patent protection promotes economic growth; the strengthening in patent protection has an ambiguous effect on income inequality but a negative effect on consumption inequality. However, with an endogenous step size, the growth effect of patent protection becomes ambiguous; the strengthening in patent protection still has an ambiguous effect on income inequality but a negative effect on consumption inequality. Under our calibrated parameter values, we find that strengthening patent protection raises the degree of income inequality under exogenous quality improvements. In the case of endogenous quality improvements, our results show that the strengthening in patent protection has an inverted-U effect on economic growth; both income inequality and consumption inequality decrease with the strength of patent protection.

Keywords: innovation; patent protection; economic growth; inequality (search for similar items in EconPapers)
JEL-codes: D30 O30 O40 (search for similar items in EconPapers)
Date: 2021-12-21
New Economics Papers: this item is included in nep-gro, nep-ino and nep-ipr
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https://mpra.ub.uni-muenchen.de/111695/8/MPRA_paper_111695.pdf revised version (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:pra:mprapa:111183

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