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Patents, R&D subsidies, and endogenous market structure in a schumpeterian economy

Angus Chu (), Yuichi Furukawa () and Lei Ji ()
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Lei Ji: Department of Strategy, Entrepreneurship & Economics, SKEMA Business School; and OFCE SciencesPo, Sophia Antipolis, France

Southern Economic Journal, 2016, vol. 82, issue 3, 809-825

Abstract: This study explores the different implications of patent breadth and R&D subsidies on economic growth and endogenous market structure in a Schumpeterian growth model. We find that when the number of firms is fixed in the short run, patent breadth and R&D subsidies serve to increase economic growth as in previous studies. However, when market structure adjusts endogenously in the long run, R&D subsidies increase economic growth but decrease the number of firms, whereas patent breadth expands the number of firms but reduces economic growth. Therefore, in accordance with empirical evidence, R&D subsidy is perhaps a more suitable policy instrument than patent breadth for the purpose of stimulating long-run economic growth.

JEL-codes: O30 O40 (search for similar items in EconPapers)
Date: 2016
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Working Paper: Patents RD subsidies and endogenous market structure in a Schumpeterian economy (2013) Downloads
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Handle: RePEc:sej:ancoec:v:82:3:y:2016:p:809-825