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On the Optimality of the Patent Renewal System

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Author Info
Suzanne Scotchmer

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Abstract

The patent system is mainly a renewal system: the patent life is chosen by the patentee in return for fees. I ask whether such a system can be justified by asymmetric information on costs and benefits of research. In such a model I show that renewal mechanisms (possibly with subsidies) are equivalent to direct revelation mechanisms and therefore cannot be improved on, regardless of the objective function. Under plausible circumstances, patents should have a uniform life, rather than varying in length, as typically occurs under a renewal system.

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File URL: http://links.jstor.org/sici?sici=0741-6261%28199922%2930%3A2%3C181%3AOTOOTP%3E2.0.CO%3B2-N&origin=repec
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Publisher Info
Article provided by The RAND Corporation in its journal RAND Journal of Economics.

Volume (Year): 30 (1999)
Issue (Month): 2 (Summer)
Pages: 181-196
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Handle: RePEc:rje:randje:v:30:y:1999:i:summer:p:181-196

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This page was last updated on 2009-10-17.

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