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Growth and Welfare Effects of Patentability and Knowledge Spillovers of Basic R&D

Angus Chu () and Yuichi Furukawa ()

MPRA Paper from University Library of Munich, Germany

Abstract: This study develops an R&D-based growth model with basic and applied research to analyze the growth and welfare effects of two patent instruments (a) the patentability of basic R&D and (b) the division of profi�t between basic and applied researchers. We �find that for the purpose of stimulating basic R&D and economic growth simultaneously, increasing the share of profi�t assigned to basic researchers is more effective than raising the patentability of basic R&D, which has either a negative effect or an inverted-U effect on technological progress. Nonetheless, a benevolent patent authority requires both patent instruments to achieve the socially optimal allocation in the decentralized economy.

Keywords: economic growth; innovation; intellectual property rights (search for similar items in EconPapers)
JEL-codes: O31 O34 O40 (search for similar items in EconPapers)
Date: 2011-01
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