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| Author: | Cornelli, F. Schankerman, M. |
| Title: | Patent renewals and R&D incentives |
| Journal: | RAND Journal of Economics
1999 : SUMMER, VOL. 30:2, p. 197-213 |
| Index terms: | PATENTS RENEWABLE RESOURCES R&D |
| Language: | eng |
| Abstract: | In a model with moral hazard and asymmetric information, the authors show that it can be welfare improving to differentiate patent lives when firms have different R&D productivities. A uniform patent life provides too much R&D incentive to low-productivity firms and too little to high-productivity ones. The optimally differentiated pattern scheme can be implemented through a menu of patent lives (or renewals) and associated fees. The authors characterize the optimal mechanism and use simulation analysis to compare it with existing patent renewal systems and to illustrate the potential welfare gains from the optimal policy. |
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