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Discussion Paper Details

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Title: Some Simple Economics of Patent Protection for Complex Technologies

Author(s): Vincenzo Denicol� and Piercarlo Zanchettin

Publication Date: July 2018

Keyword(s): Complementarity, Division of profit, Elasticity of the supply of inventions, Patent design and Sequential innovation

Programme Area(s): Industrial Organization

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.

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Bibliographic Reference

Denicol�, V and Zanchettin, P. 2018. 'Some Simple Economics of Patent Protection for Complex Technologies'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=13087