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Optimal patent breadth in a horizontal innovation growth model

Reinan Ribeiro () and David Turchick

No 2014_15, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: Patenting and licensing are introduced into the lab-equipment horizontal innovation model of endogenous growth. Patent length is not deterministic, in that patent holders' market power will collapse if and only if their patented goods get successfully imitated. The model is solved in an exact fashion. Consideration of static and dynamic inefficiencies shows that optimal intellectual property rights protection entails maximal patent length, but nonmaximal patent breadth. By fixing a lower patent breadth level, government is able to trade off a modest negative long-term effect on growth for a substantial positive short-term effect on consumption. A third potential source of inefficiency, reputational, is also considered.

Keywords: intellectual property rights; horizontal innovation; lab-equipment model; growth; patent length; patent breadth. (search for similar items in EconPapers)
JEL-codes: L13 O31 O34 O41 (search for similar items in EconPapers)
Date: 2014-09-08
New Economics Papers: this item is included in nep-fdg, nep-ger, nep-gro, nep-ino, nep-ipr and nep-pr~
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