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A Patentability Requirement And Industry-Targeted R&D

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  • Kishi, Keiichi

Abstract

I introduce a minimum innovation size required for patents into a Schumpeterian growth model. We show that to satisfy the patentability requirement for minimum innovation size, each research and development (R&D) firm targets only industries in which the incumbent's technology is of sufficient obsolescence. This is because the technological gap between innovator and incumbent is greater in industries using older technologies. Although the increase in minimum innovation size reduces the number of industries targeted for R&D, it also increases the amount of R&D investment directed at those targeted industries. Consequently, introducing a minimum innovation size has a nonmonotonic (or negative) effect on the aggregate flow of innovations. Further, by deriving the endogenous long-run distribution of innovation size, we show that an increase in minimum innovation size reduces the mean innovation size. This implies that even if the patent office only grants patents for superior innovations, it causes innovators to produce generally inferior-quality innovations.

Suggested Citation

  • Kishi, Keiichi, 2018. "A Patentability Requirement And Industry-Targeted R&D," Macroeconomic Dynamics, Cambridge University Press, vol. 22(4), pages 719-753, June.
    • Handle: RePEc:cup:macdyn:v:22:y:2018:i:04:p:719-753_00
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    Cited by:

    1. Klein, Michael A., 2022. "The reward and contract theories of patents in a model of endogenous growth," European Economic Review, Elsevier, vol. 147(C).
    2. Salman Ali & Syed Mizanur Rahman, 2020. "R&D Expenditure in a Competitive Landscape: A Game Theoretic Approach," International Journal of Business and Economics, School of Management Development, Feng Chia University, Taichung, Taiwan, vol. 19(1), pages 47-60, June.
    3. Kishi, Keiichi, 2019. "Technology diffusion, innovation size, and patent policy," European Economic Review, Elsevier, vol. 118(C), pages 382-410.
    4. Akimoto, Kiyoka & Morimoto, Takaaki, 2020. "Examination and Approval of New Patents in an Endogenous Growth Model," Economic Modelling, Elsevier, vol. 91(C), pages 100-109.

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