DP1951 Patents in a Model of Endogenous Growth

Author(s):	Edward O'Donoghue, Josef Zweimüller
Publication Date:	August 1998
Keyword(s):	Innovation, intellectual property, patent design, patent policy
JEL(s):	O31, O34, O38
Programme Areas:	Industrial Organization
Link to this Page:	cepr.org/active/publications/discussion_papers/dp.php?dpno=1951

This paper examines patent protection in an endogenous-growth model. Our aim is two-fold. First, we show how the patent policies discussed by the recent patent-design literature can influence R&D in the endogenous-growth framework, where the role of patents has been largely ignored. Second, we explore how the general-equilibrium framework contributes to the results of the patent-design literature. In a general-equilibrium model, both incentives to innovate and monopoly distortions depend on the proportion of industries that conduct R&D. Furthermore, patents affect the allocation of R&D resources across industries, and patents can distort resources away from industries where they are most productive.