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American Economic Review Vol. 106 No. 5 2016

Patents and Research Investments: Assessing the Empirical Evidence

Eric Budish1; Benjamin N. Roin2; Heidi Williams3

1 Booth School of Business, University of Chicago, 5807 South Woodlawn Avenue, Chicago, IL 60637 (e-mail: ) · 2 Sloan School of Management, MIT, 50 Memorial Drive, E62-465, Cambridge, MA 02142 (e-mail: ) · 3 Department of Economics, MIT, 50 Memorial Drive, E52-452, Cambridge, MA 02142 (e-mail: )

Abstract

A well-developed theoretical literature - dating back at least to Nordhaus (1969) - has analyzed optimal patent policy design. We re-present the core trade-off of the Nordhaus model and highlight an empirical question which emerges from the Nordhaus framework as a key input into optimal patent policy design: namely, what is the elasticity of R&D investment with respect to the patent term? We then review the - surprisingly small - body of empirical evidence that has been developed on this question over the nearly half century since the publication of Nordhaus's book.

DOI
10.1257/aer.p20161091
Volume
106
Issue
5
Pages
183-187
Language
en
Sources
crossref openalex bibtex:phds-export.bib

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