Patents as an Incentive System

Suzanne Scotchmer

Chapter 12 in Economics in a Changing World, 1996, pp 281-296 from Palgrave Macmillan

Abstract: Abstract The modem justification for granting patents is that patents give firms an incentive to invest in research and development (R&D). It therefore seems important to understand how patent law performs as an incentive system, and how it could be improved. Perhaps the most convincing investigation into the effectiveness of patent law would be an empirical one. However, an empirical investigation seems unpromising, since patent systems in different countries are not substantially different, and, in any case, important inventions are patented worldwide so that the incentives for R&D do not depend on where a firm is domiciled. In this chapter I will undertake the more limited task of trying to expose conceptually some shortcomings of patent law as an incentive system.

Keywords: Joint Venture; Expected Profit; Incentive System; Rand Journal; Post License (search for similar items in EconPapers)
Date: 1996
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DOI: 10.1007/978-1-349-25168-1_12

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