Patent Policy at a Tipping Point: Why Stronger Patent Protection May Not Foster Economic Growth

Pedro R.D. Bom and Martin Stojanovikj

MPRA Paper from University Library of Munich, Germany

Abstract: According to the available evidence, stronger patent protection exerts, at best, a modest positive effect on economic growth. Different variants of Schumpeterian growth models predict a wide range of outcomes, from strongly positive to strongly negative effects. We propose a Schumpeterian growth model with endogenous innovation scale, a generalized innovation function that combines R&D lab-equipment and labor-embodied technical knowledge, and a complexity-of-innovation effect. Consistent with the evidence, plausible calibrations of the model suggest that a typical OECD economy lies near the peak of an inverted-U-shaped curve, where the effect of stronger patent protection on growth is close to zero. In some cases, this effect may even be negative.

Keywords: Endogenous innovation scale; Endogenous markups; Patent breadth; Economic growth; Innovation. (search for similar items in EconPapers)
JEL-codes: O30 O40 (search for similar items in EconPapers)
Date: 2025-04-11
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