Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-cd9895bd7-hc48f Total loading time: 0 Render date: 2024-12-26T14:29:10.874Z Has data issue: false hasContentIssue false

Chapter 18 - Ted O’Donoghue, Suzanne Scotchmer, and Jacques Thisse, “Patent Breadth, Patent Life, and the Pace of Technological Progress” (1998)

from Part II - Innovation Theory (I): Cumulative Innovation

Published online by Cambridge University Press:  12 October 2017

Edited by
Stephen M. Maurer
Stephen M. Maurer
Affiliation:
University of California, Berkeley
Get access

Summary

In active investment climates where firms sequentially improve each other’s products, a patent can terminate either because it expires or because a noninfringing innovation displaces its product in the market. We define the length of time until one of these happens as the effective patent life, and show how it depends on patent breadth. We distinguish lagging breadth, which protects against imitation, from leading breadth, which protects against new improved products. We compare two types of patent policy with leading breadth: (1) patents are finite but very broad, so that the effective life of a patent coincides with its statutory life, and (2) patents are long but narrow, so that the effective life of a patent ends when a better product replaces it. The former policy improves the diffusion of new products, but the latter has lower R&D costs.

Type
Chapter
Information
On the Shoulders of Giants
Colleagues Remember Suzanne Scotchmer's Contributions to Economics
 , pp. 85 - 120
Publisher: Cambridge University Press
Print publication year: 2017

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

Anderson, S., de Palma, A., and Thisse, J.-F., 1992, Discrete Choice Theory of Product Differentiation, Cambridge, MA: The MIT Press.CrossRefGoogle Scholar
Aghion, P. and Howitt, P., 1992, “A Model of Growth through Creative Destruction,” Econometrica, 60, 323–352.CrossRefGoogle Scholar
Chang, H. F., 1995, “Patent Scope, Antitrust Policy and Cumulative Innovation,” The RAND Journal of Economics, 26 (Spring), 34–57.CrossRefGoogle Scholar
Cheong, I., 1994, “Invent or Develop? On Sequential Innovation and Patent Policy,” Mimeograph, Department of Economics, Princeton University.Google Scholar
Chou, T. and Haller, H., 1995, “The Division of Profit in Sequential Innovation Reconsidered,” Working Paper E95–02, Department of Economics, VPI & State University.Google Scholar
Denicolò, V., 1996, “Patent Races and Optimal Patent Breadth and Length,” The Journal of Industrial Economics, 44, 249–265.CrossRefGoogle Scholar
Gabszewicz, J. J. and Thisse, J.-F., 1980, “Entry (and Exit) in a Differentiated Industry,” Journal of Economic Theory, 22, 327–338.CrossRefGoogle Scholar
Gallini, N. T., 1992, “Patent Policy and Costly Imitation,” The RAND Journal of Economics, 23 (Spring), 52–63.CrossRefGoogle Scholar
Gilbert, R. and Shapiro, C., 1990, “Optimal Patent Length and Breadth,” The RAND Journal of Economics, 21 (Spring), 106–112.CrossRefGoogle Scholar
Green, J. and Scotchmer, S., 1995, “On the Division of Profit in Sequential Innovation,” The RAND Journal of Economics, 26 (Spring), 20–33.CrossRefGoogle Scholar
Grossman, G. M. and Helpman, E., 1991, “Quality Ladders in the Theory of Growth,” Review of Economic Studies, 58, 43–61.CrossRefGoogle Scholar
Klemperer, P., 1990, “How Broad Should the Scope of Patent Protection Be?” The RAND Journal of Economics, 21 (Spring), 113–130.CrossRefGoogle Scholar
Lanjouw, J., 1993, “Patent Protection in the Shadow of Infringement: Simulation Estimations of Patent Value,” Mimeograph, Department of Economics, Yale University.Google Scholar
Levin, R. C., Klevorick, A. K., Nelson, R. R., and Winter, S. G., 1987, “Appropriating the Returns from Industrial Research and Development,” Brookings Papers on Economic Activity, 3 (Special Issue), 783–831.CrossRefGoogle Scholar
Luski, I. and Wettstein, D., 1995, “An Optimal Patent Policy in a Dynamic Model of Innovation,” Discussion Paper 95–3, Monaster Center for Economic Research, Ben Gurion University of the Negev, Beer Sheva.Google Scholar
Mansfield, E., 1984, “R&D and Innovation: Some Empirical Findings,” in Griliches, Zvi, ed., R&D, Patents and Productivity, Chicago: University of Chicago Press for the National Bureau of Economic Research.Google Scholar
Matutes, C., Rockett, K. E., and Regibeau, P., 1996, “Optimal Patent Protection and the Diffusion of Innovation,” The RAND Journal of Economics, 27 (Spring), 60–83.CrossRefGoogle Scholar
Merges, R. P. and Nelson, R. R., 1990, “On the Complex Economics of Patent Scope,” Columbia Law Review, 90(4), 839–916.CrossRefGoogle Scholar
Mussa, M. and Rosen, S., 1978, “Monopoly and Product Quality,” Journal of Economic Theory, 18, 301–317.CrossRefGoogle Scholar
Nordhaus, W., 1969, Invention, Growth and Welfare, Cambridge, MA: MIT Press.Google Scholar
O’Donoghue, T., 1996, “Patent Protection When Innovation Is Cumulative,” Ph.D. Thesis, Department of Economics, University of California.Google Scholar
O’Donoghue, T., 1997, “A Patentability Requirement for Sequential Innovation,” Northwestern University, Math Center Discussion Paper No. 1185.Google Scholar
Pakes, A., 1986, “Patents as Options: Some Estimates of the Value of Holding European Patent Stocks,” Econometrica, 54, 755–785.CrossRefGoogle Scholar
Pakes, A. and Schankerman, M., 1984, “The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources,” in Griliches, Zvi, ed., R&D, Patents, and Productivity, Chicago: University of Chicago Press, 73–88.Google Scholar
Reinganum, J., 1989, “The Timing of Innovation: Research, Development and Diffusion,” in Schmalensee, R. and Willig, R. D., eds., Handbook of Industrial Organization, Amsterdam: Elsevier, 849–908.Google Scholar
Romer, P., 1994, “Increasing Returns and Long-Run Growth,” Journal of Political Economy, 94, 1002–1037.CrossRefGoogle Scholar
Schankerman, M. and Pakes, A., 1986, “Estimates of the Value of Patent Rights in European Countries During the Post–1950 Period,” Economic Journal, 96, 1052–1076.CrossRefGoogle Scholar
Schmitz, J. A. Jr., 1989, “On the Breadth of Patent Protection,” Mimeograph, State University of New York at Stony Brook.Google Scholar
Scotchmer, S., 1991, “Standing on the Shoulders of Giants: Cumulative Research and the Patent Law,” Journal of Economic Perspectives, Symposium on Intellectual Property Law, Winter, 29–41.CrossRefGoogle Scholar
Scotchmer, S., 1996, “Protecting Early Innovators: Should Second Generation Products be Patentable?” The RAND Journal of Economics, 27, 117–126.CrossRefGoogle Scholar
Scotchmer, S. and Green, J., 1990, “Novelty and Disclosure in Patent Law,” The RAND Journal of Economics, 21 (Spring), 131–146.CrossRefGoogle Scholar
Shaked, A. and Sutton, J., 1983, “Natural Oligopolies,” Econometrica, 51, 1469–1483.CrossRefGoogle Scholar
Tandon, P., 1982, “Optimal Patents with Compulsory Licensing,” Journal of Political Economy, 90, 470–486.CrossRefGoogle Scholar
Van Dijk, T., 1996, “Patent Height and Competition in Product Improvements,” Journal of Industrial Economics, 44, 151–167.CrossRefGoogle Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×