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Economic growth under two forms of intellectual property rights protection: patents and trade secrets

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  • Keishun Suzuki

Abstract

This paper analyzes the effects on growth of strengthened patent protections, where trade secrets are introduced as an additional protection method. Strengthening patent protection decreases the amount of common knowledge, which has two asymmetric effects on incentives to innovate. First, as competitors cannot freely use technological information, it helps successful innovators earn higher profits. Second, less disclosure of information reduces R&D productivity. The model shows that the relative importance of patents versus trade secrets determines whether the former positive effect dominates the latter negative effect. As a result, strengthened patent protection can increase economic growth when the risk of leakage of trade secrets is high. Conversely, when the risk is low, stronger patent protection hinders growth. Similar opposing results are also found in welfare analysis. Copyright Springer-Verlag Wien 2015

Suggested Citation

  • Keishun Suzuki, 2015. "Economic growth under two forms of intellectual property rights protection: patents and trade secrets," Journal of Economics, Springer, vol. 115(1), pages 49-71, May.
    • Handle: RePEc:kap:jeczfn:v:115:y:2015:i:1:p:49-71
    DOI: 10.1007/s00712-014-0410-8
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    Cited by:

    1. Keishun Suzuki, 2020. "Competition, patent protection, and innovation with heterogeneous firms in an endogenous market structure," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 22(3), pages 729-750, June.
    2. Cowan, Robin & Jonard, Nicolas & Samson, Ruth, 2024. "Strategies of search and patenting under different IPR regimes," MERIT Working Papers 2024-008, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    3. Darong Dai, 2018. "Intellectual property rights and R&D subsidies: are they complementary policies?," Journal of Economics, Springer, vol. 125(1), pages 27-49, September.
    4. Suzuki, Keishun, 2017. "Competition, Patent Protection, and Innovation in an Endogenous Market Structure," MPRA Paper 77133, University Library of Munich, Germany.
    5. Suzuki, Keishun, 2020. "Patent Puzzle, Inflation, and Internal Financial Constraint," MPRA Paper 101937, University Library of Munich, Germany.
    6. Tetsugen Haruyama & Ken-ichi Hashimoto, 2020. "Innovators and imitators in a world economy," Journal of Economics, Springer, vol. 130(2), pages 157-186, July.
    7. Klein, Michael A., 2022. "The reward and contract theories of patents in a model of endogenous growth," European Economic Review, Elsevier, vol. 147(C).
    8. 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.
    9. Klein, Michael A., 2020. "Secrecy, the patent puzzle and endogenous growth," European Economic Review, Elsevier, vol. 126(C).
    10. Sumiko Niwa, 2018. "Effects of a blocking patent on R&D with endogenous survival activities," Journal of Economics, Springer, vol. 125(3), pages 263-277, November.
    11. Mindaugas Kiškis & Tadas Limba & Gintarė Gulevičiūtė, 2016. "Business value of Intellectual Property in Biotech SMEs: case studies of Lithuanian and Arizona’s (US) firms," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 4(2), pages 221-234, December.
    12. Suzuki, Keishun, 2020. "Patent Protection, Optimal Licensing, And Innovation With Endogenous Entry," Macroeconomic Dynamics, Cambridge University Press, vol. 24(8), pages 2033-2059, December.

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    More about this item

    Keywords

    Innovation; Patent; Trade secret; Dynamic general equilibrium; O31; O34; L16;
    All these keywords.

    JEL classification:

    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure

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