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Technology Diffusion, Pareto Distribution, and Patent Policy

Keiichi Kishi ()

No 16-31, Discussion Papers in Economics and Business from Osaka University, Graduate School of Economics

Abstract: We develop a Schumpeterian growth model based on technology diffu- sion. Each rm has a different productivity level. New entrants enter into the targeted industries by learning the existing technologies owned by the other rms. Some of the new entrants succeed to adopt the frontier tech- nology. The other new entrants may adopt the non-frontier technologies. We show that if it is extremely difficult to adopt the frontier technology, the technology diffusion generates the Pareto distributions of rm size, productivity, and innovation size. Further, we introduce the minimum innovation size required for a patent into the model. That is, the patent office grants the patents only for superior inventions. We show that an increase in minimum innovation size may reduce the average patentable innovation size because of an endogenous response of the distribution of innovation size. This implies that if the patent office requires the superior innovations for the patents, it may cause innovators to produce a larger amount of inferior patentable innovations.

Keywords: Technology diffusion; Innovation; Pareto distribution (search for similar items in EconPapers)
JEL-codes: O30 O33 O34 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cse, nep-gro, nep-ino, nep-ipr and nep-knm
Date: 2016-12
References: View references in EconPapers View complete reference list from CitEc
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