DP392 How Broad Should the Scope of Patent Protection Be?

Author(s): Paul Klemperer
Publication Date: March 1990
Keyword(s): Patents, Research And Development
JEL(s): 022, 611, 621
Programme Areas: Applied Macroeconomics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=392

We explore the trade-off between a patent's length (its lifetime) and its width (its scope of coverage). A wider patent generally reduces the distortion of consumers' choices between the patented brand of the product and unpatented, lower-priced varieties sold by competitors, it also permits higher prices, and so increases (relative to profits) the deadweight losses from consumers switching consumption out of the product class. We establish conditions under which infinitely-lived but very narrowly-focused patents are the socially efficient way to reward innovation, and also show when very short-lived but very broad patents are optimal.