Abstract
This paper develops an R&D-based 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.
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The previous version of this paper was circulated under the title “Economic Growth and Patent Policy: Quantifying the Effects of Patent Length on R&D and Consumption”.
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Chu, A.C. Effects of patent length on R&D: a quantitative DGE analysis. J Econ 99, 117–140 (2010). https://doi.org/10.1007/s00712-010-0110-y
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DOI: https://doi.org/10.1007/s00712-010-0110-y