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Reinforcing the patent system? Effects of patent fences and knowledge diffusion on the development of new industries, technical progress and social welfare

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  • Murat YILDIZOGLU

Abstract

This article extends the industry dynamics model of Vallée & Yildizoglu (2006) in order to carry out a richer theoretical analysis of the consequences of a stronger patent system. This model explicitly takes into account the potentially positive effects of patents: publication of patents participates to the building of a collective knowledge stock on which new innovations can rely, and dropped patents can provide a source of technological progress for firms that are lagging behind the leaders of the industry. These dimensions of the patent system are used to question the negative results of Vallée & Yildizoglu (2006). The main results of the new model show that these positive effects do not counterbalance the negative effects of a stronger patent system on social welfare and global technological progress, even if it is a source of better protection and higher profits for the firms. The model also considers the effect of patents on the survival of the newly founded industries and on their development.

Suggested Citation

  • Murat YILDIZOGLU, 2008. "Reinforcing the patent system? Effects of patent fences and knowledge diffusion on the development of new industries, technical progress and social welfare," Cahiers du GREThA (2007-2019) 2008-17, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    • Handle: RePEc:grt:wpegrt:2008-17
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    1. Adam B. Jaffe & Josh Lerner, 2006. "Innovation and its Discontents," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 27-66, National Bureau of Economic Research, Inc.
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    More about this item

    Keywords

    Innovation; Technical progress; Patent system; Intellectual property rights (IPR); Technology policy;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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