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Patentability and Knowledge Spillovers of Basic R&D
Author(s) -
Chu Angus C.,
Furukawa Yuichi
Publication year - 2013
Publication title -
southern economic journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.762
H-Index - 58
eISSN - 2325-8012
pISSN - 0038-4038
DOI - 10.4284/0038-4038-2011.207
Subject(s) - patentability , profit (economics) , economics , welfare , basic research , industrial organization , microeconomics , patent law , computer science , market economy , intellectual property , law , political science , library science
This study develops a research and development (R&D)–based growth model with basic and applied research to analyze the growth and welfare effects of two patent instruments: (i) the patentability of basic R&D and (ii) the division of profit between basic and applied researchers. We find that for the purpose of stimulating basic R&D and economic growth simultaneously, increasing the share of profit assigned to basic researchers is more effective than raising the patentability of basic R&D, which has either a negative effect or an inverted‐U effect on technological progress. However, a benevolent patent authority requires both patent instruments to achieve the socially optimal allocation in the decentralized economy.