Innovations, Patent Races and Endogenous Growth

Joseph Zeira

No 3974, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper presents a model of innovations and economic growth, in which patent rates emerge endogenously, as a result of two assumptions: first, R&D is innovation-specific, second, marginal cost of innovation is increasing. The Paper then examines the effects of patent races on growth, welfare, and the market structure of R&D, and derives three main results. The first is that patent races reduce significantly the effect of scale on growth. The second result is that R&D is Pareto-inefficient, as too many researchers look for the easy innovations, while too few search for the difficult ones. The third result is that risk aversion leads to concentration of R&D in few firms, to reduce risk of patent race. Interestingly this does not contribute to growth but rather to more duplication.

Keywords: Endogenous growth; Innovations; Patent races; R&d sector (search for similar items in EconPapers)
JEL-codes: O31 O40 (search for similar items in EconPapers)
Date: 2003-07
New Economics Papers: this item is included in nep-dev and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Related works:
Journal Article: Innovations, patent races and endogenous growth (2011)
Working Paper: Innovations, Patent Races, and Endogenous Growth (2002)
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