Hostname: page-component-8448b6f56d-42gr6 Total loading time: 0 Render date: 2024-04-24T13:34:39.838Z Has data issue: false hasContentIssue false
  • English
  • Français

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.
Get access Rights & Permissions [Opens in a new window]

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

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

REFERENCES

Aghion, Philippe and Howitt, Peter (1998) Endogenous Growth Theory. Cambridge, MA: MIT Press.Google Scholar
Anderson, Richard K. and Enomoto, Carl E. (1986) Product quality and price regulation: A general equilibrium analysis. Economica 53, 87–95.CrossRefGoogle Scholar
Anis, Aslam H. and Wen, Quan (1998) Price regulation of pharmaceuticals in Canada. Journal of Health Economics 17, 21–38.CrossRefGoogle ScholarPubMed
Bambi, Mauro (2008) Endogenous growth and time-to-build: The AK case. Journal of Economic Dynamics and Control 32, 1015–1040.CrossRefGoogle Scholar
Barro, Robert J. and Sala-i-Martin, Xavier (1995) Economic Growth. New York: McGraw-Hill.Google Scholar
Boucekkine, Raouf, Licandro, Omar, Puch, Luis A., and del Rio, Fernando (2005) Vintage capital and the dynamics of the AK model. Journal of Economic Theory 120, 39–72.CrossRefGoogle Scholar
Danzon, Patricia M. and Chao, Li-Wei (2000) Does regulation drive out competition in pharmaceutical markets? Journal of Law and Economics 43, 311–357.CrossRefGoogle Scholar
Evans, Lewis, Quigley, Neil, and Zhang, Jie (2003) Optimal price regulation in a growth model with monopolistic suppliers of intermediate goods. Canadian Journal of Economics 36, 463–474.CrossRefGoogle Scholar
Futagami, Koichi and Iwaisako, Tatsuro (2007) Dynamic analysis of patent policy in an endogenous growth model. Journal of Economic Theory 132, 306–334.CrossRefGoogle Scholar
Gilbert, Richard and Shapiro, Carl (1990) Optimal patent length and breadth. Rand Journal of Economics 21, 106–112.CrossRefGoogle Scholar
Horowitz, Andrew W. and Lai, Edwin L.-C. (1996) Patent length and the rate of innovation. International Economic Review 37 (4), 785–801.CrossRefGoogle Scholar
Hunt, Robert M. (1995) Nonobviousness and the Incentive to Innovate: An Economic Analysis of Intellectual Property Reform. Mimeo, Federal Reserve Bank of Philadelphia.Google Scholar
Jones, J.C.H., Potashnik, Tanya, and Zhang, Anming (2001) Patents, brand-generic competition and the pricing of ethical drugs in Canada: Some empirical evidence from British Columbia, 1981–1994. Applied Economics 33, 947–956.CrossRefGoogle Scholar
Judd, Kenneth L. (1985) On the performance of patents. Econometrica 53, 567–585.CrossRefGoogle Scholar
Kelly, David L. (2005) Price and quantity regulation in general equilibrium. Journal of Economic Theory 125, 36–60.CrossRefGoogle Scholar
Klemperer, Paul (1990) How broad should the scope of patent protection be? Rand Journal of Economics 21, 113–130.CrossRefGoogle Scholar
Kwan, Yum K. and Lai, Edwin L.-C. (2003) Intellectual property rights protection and endogenous economic growth. Journal of Economic Dynamics and Control 27, 853–873.CrossRefGoogle Scholar
Michel, Philippe and Nyssen, Jules (2002) On knowledge diffusion, patents lifetime and innovation based endogenous growth. In Encaoua, David, Hall, Bronwyn H., Laisney, Francois, and Mairesse, Jacques (eds.), The Economics and Econometrics of Innovation, pp. 55–81. Boston: Kluwer Academic.Google Scholar
Nordhaus, William D. (1969) Invention, Growth and Welfare. Cambridge, MA: MIT Press.Google Scholar
Pazderka, Bohumir (1999) Patent protection and pharmaceutical R&D spending in Canada. Canadian Public Policy 25, 29–46.CrossRefGoogle Scholar
Schumpeter, Joseph (1942) Capitalism, Socialism and Democracy. New York: Harper.Google Scholar
Troyer, Jennifer L. and Krasnikov, Alexander V. (2002) The effect of price regulation on innovation in the pharmaceutical industry. Journal of Applied Business Research 18, 87–96.Google Scholar
Veall, Michael R. (1992) Brand/product innovation and the optimal length of trademark/patent protection. Economics Letters 40, 491–496.CrossRefGoogle Scholar