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Patent Length And Price Regulation In An R&D Growth Model With Monopolistic Competition

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  • Zeng, Jinli
  • Zhang, Jie
  • Fung, Michael Ka-Yiu

Abstract

This paper considers the effects of patent length and price regulation in an R&D growth model with variety expansion. Innovation requires lower bounds on patent length and price. Increasing patent duration promotes growth; increasing the cap on the price of patented products promotes growth below the monopoly-pricing level. Each policy instrument can raise welfare unless excessively used, and their welfare ranking depends on parameterizations. It is desirable, on welfare grounds, to limit patent protection along both dimensions, namely by limiting patent length and capping the price of patented products. Such limits raise welfare despite reducing the growth rate.

Suggested Citation

  • Zeng, Jinli & Zhang, Jie & Fung, Michael Ka-Yiu, 2014. "Patent Length And Price Regulation In An R&D Growth Model With Monopolistic Competition," Macroeconomic Dynamics, Cambridge University Press, vol. 18(1), pages 1-22, January.
    • Handle: RePEc:cup:macdyn:v:18:y:2014:i:01:p:1-22_00
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    Cited by:

    1. Aysun, Uluc & Kabukcuoglu, Zeynep, 2019. "Interest rates, R&D investment and the distortionary effects of R&D incentives," European Economic Review, Elsevier, vol. 111(C), pages 191-210.
    2. Chu, Angus C. & Kou, Zonglai & Wang, Xilin, 2023. "Class struggle in a Schumpeterian economy," China Economic Review, Elsevier, vol. 82(C).
    3. Wan, Jing & Zhang, Jie, 2021. "Optimal growth through innovation, investment, and labor," European Economic Review, Elsevier, vol. 132(C).
    4. Rudra Narayan Kushwaha & Taniya Ghosh, 2023. "The Effects of population growth on patents and economic growth dynamics," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2023-05, Indira Gandhi Institute of Development Research, Mumbai, India.
    5. Song, Haoyang & Hou, Jianhua & Zhang, Yang, 2023. "The measurements and determinants of patent technological value: Lifetime, strength, breadth, and dispersion from the technology diffusion perspective," Journal of Informetrics, Elsevier, vol. 17(1).
    6. Diwakar, Bharat & Sorek, Gilad & Stern, Michael, 2021. "Patents And Growth In Olg Economy With Physical Capital," Macroeconomic Dynamics, Cambridge University Press, vol. 25(2), pages 489-508, March.
    7. Angus C. Chu & Yuichi Furukawa & Lei Ji, 2016. "Patents, R&D subsidies, and endogenous market structure in a schumpeterian economy," Southern Economic Journal, John Wiley & Sons, vol. 82(3), pages 809-825, January.
    8. Hu, Mei-Ying & Lu, You-Xun & Lai, Ching-chong, 2023. "Patent term extensions and commercialization lags in the pharmaceutical industry: A growth-theoretic analysis," Journal of Macroeconomics, Elsevier, vol. 76(C).

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