The welfare cost of one-size-fits-all patent protection

Angus Chu

Journal of Economic Dynamics and Control, 2011, vol. 35, issue 6, 876-890

Abstract: To analyze the welfare gain from allowing for differentiated patent protection across sectors, this study develops a two-sector quality-ladder growth model in which patent breadth is a policy variable and derives optimal patent breadth under two patent regimes. We show that (a) uniform optimal patent breadth is a weighted average of sector-specific optimal patent breadth and (b) sector-specific optimal patent breadth is larger in the sector that has a larger market size and more technological opportunities. To derive the optimal policy, we allow for an arbitrary path of patent breadth and derive the optimal path by solving a Stackelberg differential game. We find that the optimal path of patent breadth under each patent regime is stationary, time-consistent and subgame perfect. Finally, we perform a numerical investigation and find that even a moderate degree of asymmetry across sectors can generate a significant welfare cost of uniform patent protection.

Keywords: Economic; growth; R&D; Uniform; patent; protection; Time-consistent; patent; policy (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (49)

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Working Paper: The welfare cost of one-size-fit-all patent protection (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:dyncon:v:35:y:2011:i:6:p:876-890

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