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Patent Length and the Rate of Innovation
Andrew W. Horowitz and Edwin L.-C. Lai
International Economic Review
Vol. 37, No. 4 (Nov., 1996), pp. 785-801
Published by: Wiley for the Economics Department of the University of Pennsylvania and Institute of Social and Economic Research, Osaka University
Stable URL: http://www.jstor.org/stable/2527311
Page Count: 17
You can always find the topics here!Topics: Patents, Product innovation, Technological innovation, Patent law, Marginal costs, Approximation, International economics, Unit costs, Prices, Integers
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This paper models the effect of patent length on the rate-of-innovation and consumer welfare. We find that the patent length that maximizes the rate-of-innovation exceeds that which maximizes consumer welfare. We show a countervailing effect of patent length upon the "size" and "frequency" of innovation. Longer patents increase the size, but decrease the frequency of innovation. The patent lengths that maximize the rate-of-innovation and welfare represent balance points between size and frequency. The divergence of the welfare maximizing and rate-of-innovation maximizing patent lengths has important policy implications that we briefly explore.
International Economic Review © 1996 Economics Department of the University of Pennsylvania