Patent protection, innovation and technology licensing

Wang, Leonard F.S.; Mukherjee, Arijit

Abstract

We show that the common wisdom suggesting higher investment in innovation under a stronger patent protection may not be true if the innovator can license its technology ex?post innovation. If the initial cost of production is high and the slope of the marginal cost of undertaking innovation is moderate, investment in innovation is maximised at a patent protection that is weaker than the strongest patent protection. Otherwise, strongest patent protection maximises investment in innovation. We also show that welfare is maximised neither at the strongest patent protection nor at the weakest patent protection but at an intermediate patent protection. Our results are important for patent policies.

Citation

Wang, L. F., & Mukherjee, A. (2014). Patent protection, innovation and technology licensing. Australian Economic Papers, 53(3-4), 245-254. doi:10.1111/1467-8454.12030

• Journal Article Type: Article
• Acceptance Date: Oct 1, 2014
• Online Publication Date: Mar 27, 2015
• Publication Date: Dec 1, 2014
• Deposit Date: Dec 10, 2018
• Journal: Australian Economic Papers
• Print ISSN: 0004-900X
• Electronic ISSN: 1467-8454
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• Volume: 53
• Issue: 3-4
• Pages: 245-254
• DOI: https://doi.org/10.1111/1467-8454.12030
• Public URL: https://nottingham-repository.worktribe.com/output/1394617
• Publisher URL: https://onlinelibrary.wiley.com/doi/full/10.1111/1467-8454.12030