Patent policy, investment and social welfare

James Bergin

International Journal of Industrial Organization, 2018, vol. 61, issue C, 439-458

Abstract: This paper considers patent policy in an environment where firms are heterogeneous, differentiated by their technologies, and where the impact of policy varies across firms. More stringent (restrictive) patent policy reduces access to patented knowledge and affects both profitability and the innovation performance of a firm. This in turn changes a firm’s incentives to invest in innovation. The paper studies circumstances where, comparing two firms where one has a technology weaker than the other (ranked lower in the technology comparison), the impact on the technologically weaker firm of such policy is either more or less severe than on the strong firm. In each case the consequence for investment in innovation is examined. The welfare implications of such policies are also considered. One feature of the paper is that the formulation allows for a broad and multidimensional description of technologies.

Keywords: Patents; Investment; Innovation; Welfare (search for similar items in EconPapers)
JEL-codes: D6 O3 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:eee:indorg:v:61:y:2018:i:c:p:439-458

DOI: 10.1016/j.ijindorg.2018.08.007

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