Competition, Imitation, and R&D Productivity in a Growth Model with Sector-Specific Patent Protection

Recent empirical studies suggest a need for a flexible patent regime responding to industry characteristics. In practice, sector-specific modifications of patent strength already exist but lack theoretical foundation. This paper intends to make up for this neglect by scrutinizing in what direction industry characteristics influence optimal patent strength. It is found that patents ought to be weaker, the more intense competition, the higher R&D productivity, and the more intricate reverse engineering are. Unlike similar step-by-step innovation models of economic growth, the model assumes Cournot competition and introduces an empirically substantiated measure of sector differences in the ability to catch up with the technological leader. It is found that for most empirically plausible cases the familiar inverted-U relation between patent length and growth carries over to the Cournot set-up.competition, imitation, innovation, Schumpeterian growth, sector-specific patent protection, Supplementary Protection Certificates

Big patents, small secrets: how firms protect inventions when R&D outcome is heterogeneous

Patents have long been regarded as the ‘gold standard’ of intellectual property protection. In “Little patents and big secrets: managing intellectual property”, Anton and Yao (2004) call this traditional view into question by finding that firms keep their most important innovations secret. This model modifies key assumptions made by Anton and Yao by accounting for patenting costs, patentability standards, and the fact that patents provide protection in competitive situations where secrecy fails. The latter aspect counteracts the empirically substantiated fact that, in situations where both appropriation mechanisms are applicable, secrecy provides more protection. It is found that firms keep small inventions secret, use both mechanisms for medium inventions, and patent their most important innovations. This result reestablishes the traditional view that patents are crucial to provide R&D incentives and is yet consistent with main empirical findings on the issue.Heterogeneous inventions, innovation size, intellectual property rights, patents, patent filing fees, patentability standards, renewal fees, secrecy, technology evolution

Competition, Imitation, and R&D Productivity in a Growth Model with Industry-Specific Patent Protection

Recent empirical studies suggest a need for a flexible patent regime responding to industry differences. In practice, industry-specific modifications of patent length already exist but lack theoretical foundation. This paper intends to make up for this neglect by scrutinizing in what direction industry characteristics influence optimal patent length. It is found that patents ought to be shorter, the more intense competition, the higher R&D productivity, and the more intricate reverse engineering in an industry are. Unlike similar Schumpeterian growth models, this model assumes Cournot competition and introduces an empirically substantiated measure of industry differences in the ability to catch up with a technological leader. It is found that for most empirically plausible cases the familiar inverted-U relation between patent length and growth carries over to the Cournot set-up.

Competition, imitation, and R&D productivity in agrowth model with sector-specific patent protection

Recent empirical studies suggest a need for a ?exible patent regime responding to industry characteristics. In practice, sector-speci?c modi?cations of patent strength already exist but lack theoretical foundation. This paper intends to make up for this neglect by scrutinizing in what direction industry characteristics in?uence optimal patent strength. It is found that patents ought to be weaker, the more intense competition, the higher R&D productivity, and the more intricate reverse engineering are. Unlike similar step-by-step innovation models of economic growth, the model assumes Cournot competition and introduces an empirically substantiated measure of sector di?erences in the ability to catch up with the technological leader. It is found that for most empirically plausible cases the familiar inverted-U between patent length and growth carries over to the Cournot set-up.Competition, endogenous growth, ?exible patent protection, imitation, innovation, R&D, reverse engineering, Schumpeterian growth, Supplementary Protection Certi?cates