Gains from patent protection: Innovation, market power and cost savings in India

Apoorva Gupta and Joel Stiebale

No 414, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: We study the effect of stronger patent protection on innovation activities of firms and firm-product level markups. Relying on cross-industry differences in the use of patents, we exploit firm-level variation in exposure to India's patent reform. For firms more exposed to stronger patent protection, we find an increase in patenting and R&D expenditure post-reform. Additionally, we estimate an increase in firm-product level markups after the reform, driven primarily by lower marginal costs rather than higher prices. Our results indicate that process innovations and output expansion contributed to these cost-savings, and incomplete pass-through accounts for a substantial part of rising markups.

Keywords: Intellectual property rights; patent protection; innovation; R&D; markups; patents (search for similar items in EconPapers)
JEL-codes: D22 L10 O00 O30 O31 (search for similar items in EconPapers)
Date: 2024
New Economics Papers: this item is included in nep-bec, nep-com, nep-cse, nep-ind, nep-ipr, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:295746

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