Impact of the patent system on the creation and diffusion of new technology

The paper summarises the results of several years research into the patent system at the Department of Applied Economics, University of Cambridge. Case studies of a number of large firms were carried out in four industries--chemicals (including pharmaceuticals), electrical engineering (including electronics), mechanical engineering and man-made fibres. In the light of these, the impact of the patent system on research and development, innovation, and the diffusion of new technology is considered. The patent system is found to be of marginal importance only, with the principal exception of the pharmaceutical industry. It is nevertheless found to have positive advantages for advanced industrial economies, as compared with a hypothetical weaker system.