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Patent protection, innovation and technology licensing

Wang, Leonard F.S.; Mukherjee, Arijit


Leonard F.S. Wang

Professor of Industrial Economics


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.


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
Public URL
Publisher URL