Patent Activity and Technical Change

Robert L. Basmann, Michael McAleer and Daniel Slottje
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Robert L. Basmann: Binghampton University

No 27, DEA Working Papers from Universitat de les Illes Balears, Departament d'Economía Aplicada

Abstract: As creations of the mind, intellectual property includes industrial property and copyrights. This paper presents an aggregate production function of the generalized Fechner-Thurstone (GFT) form to analyze the impact of an important component of intellectual industrial property, namely patent activity, on technical change in the USA for the period 1947-1981. Patents should alter isoquant maps, and measuring their elasticities is both intuitively and empirically appealing. We define a technology-changer as a variable that has an impact on the elasticity of the marginal rate of technical substitution (MRTS) between inputs of the GFT production function over time. Various types of US patent grant activity, specifically total, domestic, foreign, successful and unsuccessful patent applications, are used as instruments for the technology-changer. Using the GFT specification, the impacts of various technology-changers on the elasticity of the mrts between inputs are estimated directly. It is found that granted (or successful) patents, patents granted to foreign companies and individuals, total patent applications, and even unsuccessful patent applications, have significant impacts on the rates at which inputs are substituted for each other over time in production.

Keywords: GFT production function; patent activity; innovation; technical change; technology-changers; elasticity of the marginal rate of technical substitution. (search for similar items in EconPapers)
JEL-codes: D24 K1 L23 (search for similar items in EconPapers)
Date: 2007
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-pr~ and nep-law
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Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Patent activity and technical change (2007)
Working Paper: Patent Activity and Technical Change (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ubi:deawps:27

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