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PATENT LENGTH AND PRICE REGULATION IN AN R&D GROWTH MODEL WITH MONOPOLISTIC COMPETITION

Published online by Cambridge University Press:  21 June 2013

Jinli Zeng ,
Jie Zhang  and
Michael Ka-Yiu Fung
Jinli Zeng*
Affiliation:
National University of Singapore
Jie Zhang
Affiliation:
Chongqing University and National University of Singapore
Michael Ka-Yiu Fung
Affiliation:
Chinese University of Hong Kong
*
Address correspondence to: Jinli Zeng, Department of Economics, National University of Singapore, Singapore117570; e-mail: ecszjl@nus.edu.sg.
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Abstract

This paper considers the effects of patent length and price regulation in an R&D growth model with variety expansion. Innovation requires lower bounds on patent length and price. Increasing patent duration promotes growth; increasing the cap on the price of patented products promotes growth below the monopoly-pricing level. Each policy instrument can raise welfare unless excessively used, and their welfare ranking depends on parameterizations. It is desirable, on welfare grounds, to limit patent protection along both dimensions, namely by limiting patent length and capping the price of patented products. Such limits raise welfare despite reducing the growth rate.

Keywords

InnovationGrowthPatentsPrice Regulation

Information

Type
Articles
Information
Macroeconomic Dynamics , Volume 18 , Issue 1 , January 2014 , pp. 1 - 22
Copyright
Copyright © Cambridge University Press 2013 

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