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Patent protection and public capital accumulation

Author

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  • Ken Tabata

    (Kwansei Gakuin University)

Abstract

This paper examines the balanced-growth-maximizing public investment policy in a growth model where the engines of economic growth are private R&D and public capital accumulation. The government allocates tax revenue between new investment and maintenance expenditure for public capital. We consider how the balanced-growth-maximizing public investment policy changes as patent protection becomes stronger, as has been done in many countries. The results show that as patent protection becomes stronger, the income tax rate to finance public investment should be lower and the expenditure share of new investment should be higher. The balanced-growth-maximizing public investment policy leads to a smaller government as patent protection becomes stronger. This paper also shows that the balanced-growth-maximizing public investment policy is equivalent to the welfare-maximizing public investment policy along the balanced growth path. We also characterize both the growth-maximizing and welfare-maximizing combination of public investment policy and patent policy along the balanced growth path.

Suggested Citation

  • Ken Tabata, 2021. "Patent protection and public capital accumulation," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 28(1), pages 154-190, February.
    • Handle: RePEc:kap:itaxpf:v:28:y:2021:i:1:d:10.1007_s10797-020-09612-7
    DOI: 10.1007/s10797-020-09612-7
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    More about this item

    Keywords

    Patent protection; Public capital; Economic growth; Welfare;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O38 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Government Policy
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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