Patents and Supra-competitive Prices: Evidence from Consumer Products

Gaétan de Rassenfosse and Ling Zhou
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Gaétan de Rassenfosse: Ecole polytechnique federale de Lausanne
Ling Zhou: Ecole polytechnique federale de Lausanne

Working Papers from Chair of Science, Technology, and Innovation Policy

Abstract: A patent system is a central tool in innovation policy. The prospect of monopolistic pricing supposedly encourages firms to innovate. However, there is scant empirical evidence supporting the existence of higher markups for patent-protected products. Using an original dataset that links consumer products to the patents that protect them, we study the impact of patent protection on product prices. Exploiting exogenous variations in patent status, we find that a loss of patent protection leads to an 8–10 percent drop in product prices. The price drop is larger for more important patents and is more pronounced in more competitive product markets.

Keywords: innovation; markup; patent system; product; R&D incentive (search for similar items in EconPapers)
JEL-codes: D42 K11 L11 O31 O34 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2025-10
New Economics Papers: this item is included in nep-com, nep-sbm and nep-tid
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Persistent link: https://EconPapers.repec.org/RePEc:iip:wpaper:29

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