Special Interest Politics and Intellectual Property Rights: An Economic Analysis of Strengthening Patent Protection in the Pharmaceutical Industry

Since the 80’s, the pharmaceutical industry has benefited substantially from a series of policy changes that have strengthened the patent protection for brand-name drugs as a result of the industry’s political influence. This paper incorporates special interest politics into a quality-ladder model to analyze the policymakers’ tradeoff between the socially optimal patent length and campaign contributions. The welfare analysis suggests that the presence of a pharmaceutical lobby distorting patent protection is socially undesirable in a closed-economy setting but may improve social welfare in a multi-country setting, which features an additional efficiency tradeoff between monopolistic distortion and international free-riding on innovations.campaign contributions; intellectual property rights; patent length; special interest politics

A Politico-Economic Analysis of the European Union’s R&D Policy

This paper provides a politico-economic analysis of the European Union’s (EU) R&D policy. It develops an open-economy R&D-growth model characterized by two parameters that capture respectively the degree of technology spillover and the effectiveness of lobbying. In a non-cooperative equilibrium, each country chooses the level of R&D subsidy independently and fails to internalize technology spillover. Consequently, R&D subsidy is underprovided. In an economic union, the central government internalizes technology spillover but is vulnerable to lobbying by politicians from each country, who attempt to free-ride on the central government budget. Consequently, R&D subsidy is overprovided; however, this overprovision becomes less severe as the degree of technology spillover increases. Therefore, technology spillover has a surprisingly positive effect on welfare in an economic union. As for the effect on relative welfare, there is a cutoff value for the degree of technology spillover such that if and only if spillover is above this threshold, then an economic union dominates independent countries in welfare. Furthermore, this threshold is an increasing function in the effectiveness of lobbying. This paper also considers the possibility that the EU faces a binding budget ceiling. In this case, lobbying on R&D subsidy exerts a distortionary effect on revenue allocation, and hence a welfare loss continues to exist.endogenous growth; policy coordination; lobbying; R&D subsidy

Economic Growth and Patent Policy: Quantifying the Effects of Patent Length on R&D and Consumption

Is the patent length an effective policy instrument in stimulating R&D? This paper develops a generalized variety-expanding growth model and then calibrates the model to the aggregate data of the US economy to analyze the effects of extending the patent length. The numerical exercise suggests that at the empirical range of patent-value depreciation rates, extending the patent length beyond 20 years leads to only a very small increase in R&D despite R&D underinvestment in the market economy. On the other hand, shortening the patent length can lead to a significant reduction in R&D and consumption. This paper also makes use of the dynamic general-equilibrium framework to examine the fraction of total factor productivity (TFP) growth that is driven by R&D, and the calibration exercise suggests that about 35% to 45% of the long-run TFP growth in the US is driven by R&D. Finally, this paper identifies and analytically derives a dynamic distortion of the patent length on saving and investment in physical capital that has been neglected by previous studies, which consequently underestimate the distortionary effects of patent protection.endogenous growth; intellectual property rights; patent length; R&D

Effects of thermal conduction in sonoluminescence

We show by numerical hydrodynamic calculations that there are two important effects of thermal conduction in sonoluminescence: (i) the bubble remains close to being isothermal during the expansion phase; and (ii) a cold, dense layer of air is formed at the bubble wall during the contraction phase. These conclusions are not sensitive to the particular equation of state used, although details of the dynamical evolution of the bubble are

M-Fivebrane from the Open Supermembrane

Covariant field equations of M-fivebrane in eleven dimensional curved superspace are obtained from the requirement of kappa-symmetry of an open supermembrane ending on a fivebrane. The worldvolume of the latter is a (6|16) dimensional supermanifold embedded in the (11|32) dimensional target superspace. The kappa-symmetry of the system imposes a constraint on this embedding, and a constraint on a modified super 3-form field strength on the fivebrane worldvolume. These constraints govern the dynamics of the M-fivebrane.Comment: 11 pages, Latex, references and appendix adde

Effects of Patent Length on R&D: A Quantitative DGE Analysis

This paper develops an R&D-growth model and calibrates the model to aggregate data of the US economy to quantify a structural relationship between patent length, R&D and consumption. Under parameter values that match the empirical flow-profit depreciation rate of patents and other key features of the US economy, extending the patent length beyond 20 years leads to a negligible increase in R&D despite equilibrium R&D underinvestment. In contrast, shortening the patent length leads to a significant reduction in R&D and consumption. Finally, this paper also analytically derives and quantifies a dynamic distortionary effect of patent length on capital investment.innovation-driven growth; intellectual property rights; patent length; R&D

Macroeconomic Effects of Intellectual Property Rights: A Survey

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent-policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection as well as empirical evidence on the effects of patent rights. Then, the second part considers the international aspects of IPR protection. In summary, this survey draws the following conclusions from the literature. Firstly, different patent-policy instruments have different effects on R&D and growth. Secondly, there is empirical evidence supporting a positive relationship between IPR protection and innovation, but the evidence is stronger for developed countries than for developing countries. Thirdly, the optimal level of IPR protection should tradeoff the social benefits of enhanced innovation against the social costs of multiple distortions and income inequality. Finally, in an open economy, achieving the globally optimal level of protection requires an international coordination (rather than the harmonization) of IPR protection.economic growth; innovation; intellectual property rights