Working Paper: NBER ID: w7070
Authors: Hugo A. Hopenhayn; Matthew F. Mitchell
Abstract: It may be advantageous to provide a variety of kinds of patent protection to heterogenous innovations. Innovations which benefit society largely through their use as building blocks to future inventions may require a different scope of protection in order to be encouraged. We model the problem of designing an optimal patent menu (scope and length) when the fertility of an innovation in generating more innovations cannot be observed. The menu of patent scope can be implemented with mandated buyout fees. Evidence of heterogeneous fertility and patent obsolescence, keys to the model, are presented using patent data from the US.
Keywords: patent policy; innovation; fertility; patent design
JEL Codes: O31; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| breadth of patent protection (O34) | level of innovation (O35) |
| fertility (J13) | level of innovation (O35) |
| breadth of patent protection (O34) | fertility (J13) |
| fertility (J13) | subsequent innovations (O35) |
| narrow definitions of patent rights (O34) | market power (L11) |
| patent authority (O34) | innovation outcomes (O36) |