Patent claims and economic growth

This study introduces a blocking patent on horizontal R&D into the endogenous growth model of Chu et al. (2012), which features a blocking patent on vertical R&D. Results show that strengthening patent protection on horizontal R&D promotes vertical innovation (quality improvement) but hinders horizontal innovation (variety expansion). This effect of a horizontal blocking patent on directionality of innovation is opposite to that of the vertical blocking patent analyzed by Chu et al. (2012). Results also show that under mild conditions, strengthening a blocking patent on horizontal innovation as well as on vertical innovation can increase economic growth and social welfare.     

The struggle to survive in the R&D sector: Implications for innovation and growth

By allowing for investment activities by research and development (R&D) firms to prevent product obsolescence, we show that if legal patent protection is too strong, a higher R&D subsidy rate delivers insufficient investments for survival in the R&D sector, depressing innovation and growth in the long run.     

Occupational choice and entrepreneurship: effects of R&D subsidies on economic growth

Most R&D-based growth models fail to explicitly account for the role of entrepreneurs in economic growth. By contrast, this study accounts for this factor and constructs an overlapping-generations model that includes entrepreneurial innovation and the occupational choice of becoming an entrepreneur or a worker. For the role of entrepreneurs, even a policy intended to encourage innovation can negatively affect economic growth. For the effect of such policies, I focus on the role of R&D subsidies. I show that while R&D subsidies promote entrepreneurs’ R&D activities, they increase workers’ wages by boosting labor demand. Thus, it is more attractive to be a worker, which reduces the number of entrepreneurs. Subsidies can have both a negative and positive effect on growth, which results in an inverted U-shaped relationship between R&D subsidies and growth. In addition, a growth-maximizing R&D subsidy rate exists, although this rate is too high to maximize the welfare level of any one generation. When individuals are heterogeneous in their abilities, R&D subsidies reduce intra-generational inequalities.     

Growth and optimal policies in an R&D-growth model with imperfect international capital mobility

In this paper, we examine the effects of international capital mobility on innovation, growth, and optimal growth policies in a small open economy with R&D-driven growth. Households can borrow funds from an imperfect international capital market to finance their investment in R&D firms. We show that the economy can reach a higher growth rate if international capital is more mobile. This result is consistent with recent empirical findings. Moreover, we show that the common growth-enhancing policies, such as patent protection and the R&D subsidies, have an additional negative welfare effect when households can access the international capital market. Accordingly, the optimal patent protection and R&D subsidy should be smaller when the degree of international capital mobility is higher.     

Does intellectual monopoly stimulate or stifle innovation?

This study develops an R&D-based growth model with vertical and horizontal innovation to shed some light on the current debate on whether patent protection stimulates or stifles innovation. We analyze the effects of patent protection in the form of blocking patents. We show that patent protection changes the direction of innovation by having asymmetric effects on vertical innovation (i.e., quality improvement) and horizontal innovation (i.e., variety expansion). Calibrating the model and simulating transition dynamics, we find that strengthening the effect of blocking patents stifles vertical innovation and decreases economic growth but increases social welfare due to an increase in horizontal innovation. In light of this finding, we argue that in order to properly analyze the growth and welfare implications of patents, it is important to consider their often neglected compositional effects on vertical and horizontal innovation.     

Private patent protection in the theory of Schumpeterian growth

We develop a Schumpeterian growth model with privately optimal intellectual property rights (IPRs) enforcement and investigate the implications for intellectual property and R&D policies. In our setting, successful innovators undertake costly rent protection activities (RPAs) to enforce their patents. RPAs deter innovators who seek to discover higher quality products and thereby replace the patent holder. RPAs also deter imitators who seek to capture a portion of the monopoly market by imitating the patent holder's product. We investigate the role of private IPR protection by considering the impact of subsidies to RPAs on economic growth and welfare. We find that a larger RPA subsidy raises the innovation rate if and only if the ease of imitation is above a certain level. With regards to welfare, we find that depending on the parameters it may be optimal to tax or subsidize RPAs. Thus a prohibitively high taxation of RPAs is not necessarily optimal. We also show that the presence of imitation strengthens the case for subsidizing R&D.     

Patents and quality growth in OLG economy

This paper shows how heterogeneity in patent ownership across generations and lifecycle saving considerations qualitatively change the conventional implications of patent policy for quality growth. We study a close Overlapping Generations economy that grows through sequential quality improvements (“quality-ladder”), to show that for plausible values of the Inter-temporal Elasticity of Substitution (a) shorter patent length enhances growth (b) under exogenous innovation size loosening patent breadth protection spurs R&D investment and quality growth and (c) the effect of loosening lagging breadth protection on R&D investment and quality growth under endogenous innovation size depends on patents length. Our findings explore a new channel through which strong patents may hinder innovation and emphasize the importance of coordination in patent-policy across the different dimensions of the patents system.     

Innovation or imitation? The effect of spillovers and competitive pressure on firms’ R&D strategy choice

In this paper a firm’s R&D strategy is assumed to be endogenous and allowed to depend on both internal firm characteristics and external factors. Firms choose between two strategies, either they engage in R&D or abstain from own R&D and imitate the outcomes of innovators. This yields three types of equilibria, in which either all firms innovate, some firms innovate and others imitate, or no firm innovates. Firms’ equilibrium strategies crucially depend on external factors. We find that the efficiency of intellectual property rights protection positively affects firms’ incentives to engage in R&D, while excessive competitive pressure has a negative effect. In addition, smaller firms are found to be more likely to become imitators when the product is homogeneous and the level of spillovers is high. Regarding social welfare our results indicate that strengthening intellectual property protection can have an ambiguous effect. In markets characterized by a high rate of innovation a reduction of intellectual property rights protection can discourage innovative performance substantially. However, a reduction of patent protection can also increase social welfare because it may induce imitation. This indicates that policy issues such as the optimal length and breadth of patent protection cannot be resolved without taking into account specific market and firm characteristics.     

Input and output additionality of R&D subsidies

This article analyses the effects of public R&D subsidies on R&D input and output of German firms. We distinguish between the direct impact of subsidies on R&D investment and the indirect effect on innovation output measured by patent applications. We disentangle the productivity of purely privately financed R&D and additional R&D investment induced by the public incentive scheme. For this, a treatment-effect analysis is conducted in a first step. The results are implemented into the estimation of a patent production function in a second step. It turns out that both purely privately financed R&D and publicly induced R&D show a positive effect on patent outcome.     

A note on the effect of patents in endogenous growth models

This note examines the effect of patent protection in an endogenous growth model with a generic innovation process. It indicates that increasing patent breadth stimulates innovation when R&D is less intermediates-intensive than production, whereas it has a non-monotonic effect on innovation when the former is more intermediates-intensive than the latter.     

R&D subsidies in a model of growth with dynamic market structure

This paper presents the effects of an R&D subsidy in a Schumpeterian general equilibrium model with rich industry dynamics. R&D subsidies raise the long-run growth rate, but they also raise the level of industry concentration. In the model firms compete for market share through process R&D endogenously determining the market structure within and across industries. Endogeneity of the market structure allows for analysis of changes in the moments of the firm size distribution in response to policy. R&D subsidies primarily benefit large incumbent firms who increase their innovation rates creating a greater technological barrier to entry. Concentration increases with fewer firms and a higher variance in the market shares. In general equilibrium, the greater distortions in the product market cause the wage rate to fall which leads to increased turnover rates. In addition, the analysis demonstrates that the model captures a large number of empirical regularities described in the industrial organization literature, but absent from most endogenous growth models. These features, such as entering firms are small relative to incumbents, the hazard rate of exit is negatively related to firm size, and large firms spend more on R&D than small firms play important roles in understanding the impact of R&D subsidies on the economy.     

Government Subsidies of R&D in a Product Cycle Framework: US–Japan Simulations

The welfare effects of R&D subsidies are examined using a product cycle model of trade between two developed countries. Simulations are done for steady-state welfare in Japan and the USA for high- and low-skilled labor over different combinations of subsidy rates. Japanese subsidies to R&D usually benefit Americans owing to an increase in product variety. However, because Japanese R&D reduces wages in the US high-tech sector, American high-skilled workers are hurt if Japanese subsidies are too large. Large American subsidies may cause Japanese innovation to cease. However, Japanese steady-state welfare would be maximized in this case.     

科技创新补贴供给侧改革与企业研发策略研究*

本文利用2010—2015年沪深A 股上市公司的科技创新补助与R&D研发数据，分析了中国供给侧改革中创新驱动政策对企业创新行为与策略选择的引导激励效果。研究发现：随着创新驱动供给侧改革的实施，企业进行R&D研发投入的意愿得到加强，开始偏好长期研发投入。创新补贴认定与考核标准相关政策机制落地，地方政府的无效创新补贴激励机制被抑制。在供给侧改革下，企业对创新长期驱动与短期经济效益进行理性权衡抉择，减少了外观设计专利等策略性创新成果的产出。本文进一步通过对产权性质分组还发现：供给侧改革后，国有企业创新产出激励最为突出，大幅度增加了专利的申请。而民营企业则通过扩大长期研发项目的投入和聘用储备技术人员，为下一阶段的创新研发作铺垫。       

In-house R&D,external R&D and cooperation breadth in Spanish manufacturing firms: is there a synergistic effect on innovation outputs?

ABSTRACT

This study explores the nature of relationship between in-house R&D, external R&D and cooperation breadth and their joint impact on patent counts as well as technological, product and process, innovations in Spanish manufacturing firms. With regards to patent counts, empirical findings from a Generalized Method of Moments (GMM) estimator suggest a complementarity effect of internal and external R&D activities conditional on the breadth of R&D cooperation. Concerning technological innovation, results from dynamic random-effects probit models indicate no synergistic effects. In addition, we find evidence of persistence of all three innovation output measures. Our results suggest policy implications in relation to strengthening firms’ absorptive capacity that could have long-run effects.     

The role of diminishing returns in neo-Schumpeterian growth theory

Summary. This paper generalizes Segerstrom [5], a dynamic general equilibrium model of endogenous growth through quality improvements in which innovation and imitation are modeled as the outcomes of research and development (R&D) races. Specific factors introduced into the technologies of both R&D activities achieve diminishing returns to scale in R&D. The comparative-static results of subsidies to R&D activities depend on the degree of diminishing returns to scale in R&D. When there is (is not) a sufficient degree of diminishing returns to R&D, a subsidy to innovative activity increases (decreases) innovative activity. Received: July 8, 1994; revised version: June 9, 1997     

R&D policy with layers of economic integration

This paper examines whether the optimal unilateral R&D policy for an open economy is a subsidy or a tax. It constructs a general equilibrium model with three successive layers of international integration: (a) trade in goods, (b) trade in technologies with international R&D spillovers and (c) internationally-coordinated R&D policy. Trade in technologies introduces the possibility that an R&D subsidy will have such strong, negative terms-of-trade effects that it harms domestic welfare. Numerical simulations of the OECD show this is a possibility for the US and Japan. With international R&D spillovers a domestic R&D subsidy may reduce domestic innovation.     

Optimal research and development and the cost of business cycles

While research and development (R&D) investment has been procyclical in the post-war period, recent literature suggests that the optimal path for R&D is countercyclical, and that the economy would be better off by subsidizing R&D in recessions. The objective of this paper is to analyze the welfare effects of distortions in the intertemporal allocation of R&D resources and to compare diverse policy interventions so as to improve social welfare. To this end, we introduce a calibrated dynamic stochastic general equilibrium model with Schumpeterian endogenous growth that is capable of explaining the observed procyclicality of R&D. Our results show that the cost of business cycles is lower in the decentralized economy with procyclical R&D than in the efficient allocation with countercyclical R&D. This is because the suboptimal propagation of shocks in the decentralized equilibrium offsets some of the existing steady-state distortions. In this second-best context, countercyclical R&D subsidies have no positive effect on welfare. In contrast, fiscal policies aimed at restoring the optimal steady-state produce large welfare gains.     

The effect of risk-sharing government subsidy on corporate R&D investment: Empirical evidence from Korea

Despite the wide belief that the high social rates of returns to R&D investment justify government subsidy policy in advanced countries, there are only limited studies about whether the R&D subsidy as a means of risk-sharing stimulates R&D investment of small and medium sized enterprises (SMEs) in developing countries. This paper empirically investigates the issue, using a unique data set on government subsidy for new technology development of Korean manufacturing firms, listed and non-listed, for the period from 2000 to 2007. The paper employs the DID estimation procedure and controls for simultaneity of the subsidy for new technology development using 2SLS and two step Tobit procedure. Our empirical results show that there is no solid evidence for crowding-out effects of the government subsidy. These results suggest that government subsidies could help SMEs to overcome the barriers to risky R&D projects through sharing R&D failure risk with government and by reducing capital costs to undertake new technology development projects, and thus the subsidy policy for new technology development seems to be partly successful in promoting the R&D investment of the Korean SMEs.     

Types of patents and driving forces behind the patent growth in China

As a developing economy, China's unprecedented patenting surge is puzzling. We study China's patent surge and its driving forces using a novel and comprehensive merged dataset on patent applications filed by Chinese firms. We find that R&D investment, FDI, and patent subsidy have different effects on different types of patents. First, R&D investment has a positive and significant impact on patenting activities for all types of patents under different model specifications. Second, the stimulating effect of foreign direct investment on patent applications is only robust for utility model patents and design patents. Third, the patent subsidy only has a positive impact on design patents. The results imply that FDI and patent subsidy may disproportionately spur low-quality patents.     

Innovation and imitation under imperfect patent protection

The paper develops a model in which the spillover of R&D is a consequence of a rational investment in imitation. The model incorporates the innovator's choice between patenting and secrecy as a protection device. The analysis demonstrates that an increase in patent breadth always discourages resorting to secrecy, whereas the influence of increased patent life is the opposite with large spillovers. An increase in patent life can also reduce innovative activity with large spillovers. Under endogenous imitation, short patents are socially optimal.