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Patent Quality and a Two‐Tiered Patent System
Author(s) -
Atal Vidya,
Bar Talia
Publication year - 2014
Publication title -
the journal of industrial economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.93
H-Index - 77
eISSN - 1467-6451
pISSN - 0022-1821
DOI - 10.1111/joie.12055
Subject(s) - quality (philosophy) , business , ex ante , patent troll , patent application , welfare , value (mathematics) , patent law , industrial organization , intellectual property , economics , engineering , computer science , market economy , philosophy , epistemology , machine learning , macroeconomics , electrical engineering , operating system
In this paper, we study the determinants of patent quality and volume of patent applications when inventors care about perceived patent quality. We analyze the effects of various policy reforms, specifically, a proposal to establish a two‐tiered patent system. In the two‐tiered system, applicants can choose between a regular patent and a more costly, possibly more thoroughly examined, ‘gold‐plate’ patent. Introducing a second patent‐tier can reduce patent applications, reduce the incidence of bad patents, and sometimes increase social welfare. The gold‐plate tier attracts inventors with high ex‐ante probability of validity, but not necessarily applicants with innovations of high economic value.