Patent Length, Investment And Social Welfare
James Bergin
No 1282, Working Paper from Economics Department, Queen's University
Abstract:
The intent of the patent system is to encourage innovation by granting the innovator exclusive rights to a discovery for a limited period of time: with monopoly power, the innovator can recover the costs of creating the innovation which otherwise might not have existed. And, over time, the resulting innovation makes everyone better off. This presumption of improved social welfare is considered here. The paper examines the impact of patents on welfare in an environment where there are large numbers of (small) innovators. With patents, because there is monopoly for a limited time the outcome is necessarily not socially optimal, although social welfare may be higher than in the no-patent state. Patent acquisition and ownership creates two opposing incentives at the same time: the incentive to acquire monopoly rights conferred by the patent spurs innovation, but subsequent ownership of those rights inhibits innovation (both own innovation and that of others). On balance, which effect will dominate? In the framework of this paper separate circumstances are identified under which patents are either beneficial or detrimental to innovation and welfare; and comparisons are drawn with the socially optimal level of investment ininnovation.
Keywords: Patents; Investment in R&D; Welfare (search for similar items in EconPapers)
JEL-codes: D61 D64 O31 O34 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2011-10
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino, nep-ipr and nep-pr~
References: Add references at CitEc
Citations:
Downloads: (external link)
https://www.econ.queensu.ca/sites/econ.queensu.ca/files/qed_wp_1282.pdf First version 2011 (application/pdf)
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:qed:wpaper:1282
Access Statistics for this paper
More papers in Working Paper from Economics Department, Queen's University Contact information at EDIRC.
Bibliographic data for series maintained by Mark Babcock (babcockm@queensu.ca).