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Patent Policy at a Tipping Point: Why Stronger Patent Protection May Not Foster Economic Growth

Author

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  • Bom, Pedro R.D.
  • Stojanovikj, Martin

Abstract

According to the available evidence, stronger patent protection exerts, at best, a modest positive effect on economic growth. Different variants of Schumpeterian growth models predict a wide range of outcomes, from strongly positive to strongly negative effects. We propose a Schumpeterian growth model with endogenous innovation scale, a generalized innovation function that combines R&D lab-equipment and labor-embodied technical knowledge, and a complexity-of-innovation effect. Consistent with the evidence, plausible calibrations of the model suggest that a typical OECD economy lies near the peak of an inverted-U-shaped curve, where the effect of stronger patent protection on growth is close to zero. In some cases, this effect may even be negative.

Suggested Citation

  • Bom, Pedro R.D. & Stojanovikj, Martin, 2025. "Patent Policy at a Tipping Point: Why Stronger Patent Protection May Not Foster Economic Growth," MPRA Paper 124341, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:124341
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    More about this item

    Keywords

    Endogenous innovation scale; Endogenous markups; Patent breadth; Economic growth; Innovation.;
    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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