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Some Simple Economics of Patent Protection for Complex Technologies

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  • Denicolo, Vincenzo
  • Zanchettin, Piercarlo

Abstract

We analyze patent protection when innovative technologies are "complex" in that they involve sequential and complementary innovations. We argue that complexity affects the classic Nordhaus trade-off between innovation and static monopoly distortions. We parametrize the degree of sequentiality and that of complementarity and show that the optimal level of patent protection increases with both. We also address the issue of the optimal division of profit among different innovators.

Suggested Citation

  • Denicolo, Vincenzo & Zanchettin, Piercarlo, 2018. "Some Simple Economics of Patent Protection for Complex Technologies," CEPR Discussion Papers 13087, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:13087
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    References listed on IDEAS

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    More about this item

    Keywords

    Sequential innovation; Complementarity; Patent design; Elasticity of the supply of inventions; Division of profit;
    All these keywords.

    JEL classification:

    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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