Patent Policy Versus Innovation

Sequential Innovation , R & D Intensity , and Patent Policy

This paper studies optimal patent policy in a dynamic setting with sequential innovation. Firms innovate by undertaking “research” activities to generate new ideas and by undertaking “developement” activities to commercialize these ideas. To provide firms with incentive to invest in R&D, the social planner grants a monopoly right (patent) to an innovator to exclude its opponent from producing t...

The Decision to Patent , Cumulative Innovation , and Optimal Policy ∗

Optimal patent breadth is an issue that is still being vigorously debated at both the theoretical and empirical levels. This paper analyzes optimal patent policy in the context of cumulative innovation in a model that endogenizes the patenting decisions of early innovators. In the theoretical literature on cumulative innovation, it is generally assumed that all innovations are patented. However...

Cognitive Biases Impacting Pharmaceutical Innovation and Patent Policy

Patent Policy, Patent Pools, And The Accumulation Of Claims In Sequential Innovation

We present a dynamic model where the accumulation of patents generates an increasing number of claims on sequential innovation. We compare innovation activity under three regimes –patents, no-patents, and patent pools– and find that none of them can reach the first best. We find that the first best can be reached through a decentralized tax-subsidy mechanism, by which innovators receive a subsi...

The U.S. patent system in transition: policy innovation and the innovation process

This paper surveys the major changes in patent policy and practice that have occured in the last two decades in the U.S., and reviews the existing analyses by the economists that attempt to measure the impacts these changes have had on the processes of technological change. It also reviews the broader theoretical and empirical literature that bears on the expected effects of changes in patent p...