Working Paper: CEPR ID: DP13087
Authors: Vincenzo Denicol; Piercarlo Zanchettin
Abstract: We analyze patent protection when innovative technologies are "complex" in that they involve sequential and complementary innovations. We argue that complexity affects the classic Nordhaus trade-off between innovation and static monopoly distortions. We parametrize the degree of sequentiality and that of complementarity and show that the optimal level of patent protection increases with both. We also address the issue of the optimal division of profit among different innovators.
Keywords: sequential innovation; complementarity; patent design; elasticity of the supply of inventions; division of profit
JEL Codes: O30; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| complexity in technology (O33) | increase in patent protection (O34) |
| increase in sequentiality (C69) | increase in patent protection (O34) |
| increase in complementarity (D10) | increase in patent protection (O34) |
| elasticity of the supply of inventions (O39) | optimal level of patent protection (O34) |
| optimal level of patent protection (O34) | influenced by Nordhaus trade-off (F16) |