The welfare cost of one-size-fit-all patent protection

Angus Chu

MPRA Paper from University Library of Munich, Germany

Abstract: To analyze the welfare gain from allowing for differentiated patent protection across sectors, this study develops a two-sector quality-ladder growth model in which patent breadth is a policy variable and derives the optimal patent breadth under two policy regimes. We show that (i) the optimal uniform patent breadth is a weighted average of the optimal sector-specific patent breadth, and (ii) the optimal sector-specific patent breadth is larger in the sector that has a larger market size and more technological opportunities. To derive the optimal policy, we allow for an arbitrary path of patent breadth and derive the optimal path by solving a Stackelberg differential game. We find that the optimal path of patent breadth under each regime is stationary, time-consistent and subgame perfect. Finally, we perform a numerical investigation and find that even a moderate degree of asymmetry across sectors can generate a significant welfare cost of uniform patent protection.

Keywords: economic growth; R&D; uniform patent protection; time-consistent patent policy (search for similar items in EconPapers)
JEL-codes: O31 O34 O40 (search for similar items in EconPapers)
Date: 2009-09, Revised 2010-03
New Economics Papers: this item is included in nep-ino, nep-ipr and nep-pr~
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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https://mpra.ub.uni-muenchen.de/21401/1/MPRA_paper_21401.pdf original version (application/pdf)
https://mpra.ub.uni-muenchen.de/23286/1/MPRA_paper_23286.pdf revised version (application/pdf)

Related works:
Journal Article: The welfare cost of one-size-fits-all patent protection (2011)
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