Measuring Innovation with Patents when Patenting is Strategic

Jonathan Lee ()

2017 Papers from Job Market Papers

Abstract: I model a firm's decision to create an invention and, separately, her decision to protect that invention with intellectual property (IP). Because external forces, such as industry characteristics or policy regimes, can affect the innovation and protection decisions differently, the model predicts that innovation measures based on IP usage, such as patent counts, may not correlate with innovative effort. For example, the threat of competition generally has an inverse-U shaped relationship with observed patenting but has a normal-U relationship with innovative effort. In this case, the average quality of a firm's patent portfolio is a better proxy for innovation. I derive general conditions under which various patent statistics, such as quality-adjusted patenting or average patent quality, are useful proxies for how innovation responds to external influences.

JEL-codes: K11 L24 O31 O34 (search for similar items in EconPapers)
Date: 2017-11-09
New Economics Papers: this item is included in nep-ino, nep-ipr, nep-knm, nep-law and nep-sbm
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