Working Paper: CEPR ID: DP4883
Authors: Steffen Hoernig
Abstract: The European Union will be introducing a Europe-wide patent, the so-called Community Patent. Its aim is to foster innovative activity, but strategic effects between firms competing in R&D have not been considered in the official discourse. We show that, even if these are taken into account, the Community Patent will increase innovative activity and welfare. On the other hand, if the decision of participating in R&D is considered, then this increased R&D will be concentrated into fewer firms. Furthermore, we show that existing asymmetries between countries and firms are bound to increase.
Keywords: community patent; participation in R&D; R&D race
JEL Codes: L52; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| community patent (O34) | innovative activity (O35) |
| community patent (O34) | welfare (I38) |
| community patent (O34) | market structure changes (D49) |
| community patent (O34) | changes in R&D decisions among firms (O39) |
| increased competition (L13) | changes in market structure (D49) |
| R&D investments are strategic complements (O39) | total research outlays increase (I23) |
| R&D investments are strategic substitutes (O32) | firm value increases (G32) |
| community patent (O34) | total welfare (D69) |