 Compulsory licensing and innovation – Historical evidence from German patents after WWIJoerg Baten, Nicola Bianchi and Petra Moser Journal of Development Economics, 2017, vol. 126, issue C, 231-242 Abstract: Compulsory licensing allows governments to license patented inventions without the consent of patent owners. Intended to mitigate the potential welfare losses from enforcing foreign-owned patents, many developing countries use this policy to improve access to drugs that are covered by foreign-owned patents. The effects of compulsory licensing on access to new drugs, however, are theoretically ambiguous: Compulsory licensing may encourage innovation by increasing competition or discourage innovation by reducing expected returns to R&D. Empirical evidence is rare, primarily because contemporary settings offer little exogenous variation in compulsory licensing. We address this empirical challenge by exploiting an event of compulsory licensing as a result of World War I when the US Trading with the Enemy Act made all German-owned patents available for licensing to US firms. Firm-level data on German patents indicate that compulsory licensing was associated with a 30 percent increase in invention by German firms whose inventions were licensed. Keywords: O3; O34; O38; N3; Innovation; Patents; Compulsory licensing; TRIPS; Intellectual property; Economic history (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:126:y:2017:i:c:p:231-242 DOI: 10.1016/j.jdeveco.2017.01.002 Access Statistics for this article Journal of Development Economics is currently edited by M. R. Rosenzweig More articles in Journal of Development Economics from Elsevier |
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