† : The views expressed here are those of the authors and do not necessarily represent the views of the Federal Reserve Bank of Philadelphia or the Federal Reserve System. A Reply to Hahn and Wallsten (2003) In the recent European debate over software patents, fourteen economists issued a letter to the European Parliament arguing against expanding patent protection to software inventions without restriction (Anderson et al., 2003). They released this letter with a report (David et al., 2003) which cited our working paper, “An Empirical Look at Software Patents. ” In that paper, we did not find that granting software patents has increased R&D. In fact, we found evidence that firms may be substituting software patents for R&D. These results seem inconsistent with the traditional incentive theory of patents. In December of 2003, Robert Hahn and Scott Wallsten issued a critique of our paper (Hahn and Wallsten, 2003). This note is a response to their criticisms. But first, we wish to emphasize a point of agreement between these two papers (and the fourteen economists): Much more research should be done on the effects of granting software patents. Hahn and Wallsten argue that a policy question should not be decided on the basis of one article, and we heartil
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