Using Patents In Growth Models

This paper argues that macroeconomic models of endogenous growth driven by technological change could be much improved by drawing lessons from the microeconomic literature of intellectual property design. Growth models use overly simplistic and sometimes incorrect assumptions regarding the intellectual property regime. Microeconomic theory and empirical work are reviewed to demonstrate that determining optimal intellectual property design is complex and has important implications for firm behavior and performance. Considering the question of intellectual property design in a dynamic general equilibrium model should yield important insights about how intellectual property impacts growth and welfare.