Patentability, industry structure, and innovation

Robert Hunt

No 01-13, Working Papers from Federal Reserve Bank of Philadelphia

Abstract: To qualify for a patent, an invention must be new, useful, and nonobvious. This paper presents a model of sequential innovation in which industry structure is endogenous and a standard of patentability determines the proportion of all inventions that qualify for protection. There is a unique patentability standard, or inventive step, that maximizes the rate of innovation by maximizing the number of firms engaged in R&D. Surprisingly, this standard is more stringent for industries disposed to innovate rapidly. If a single standard is applied to heterogeneous industries, it will encourage entry, and therefore innovation, in some industries while discouraging it in others. The model suggest a number of important implications for patent policy.

Keywords: Patents; Industries (search for similar items in EconPapers)
Date: 2002
New Economics Papers: this item is included in nep-ent and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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Related works:
Journal Article: Patentability, Industry Structure, and Innovation (2004)
Working Paper: Patentability, Industry Structure and Innovation (2003)
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