Effects of Patents on R&D,Economic Growth, and Welfare

Research Project

Project/Area Number	09630020
Research Category	Grant-in-Aid for Scientific Research (C)
Allocation Type	Single-year Grants
Section	一般
Research Field	経済理論
Research Institution	Osaka University
Principal Investigator	FUTAGAMI Koichi Graduate School of Economics, Associate Professor, 大学院・経済学研究科, 助教授 (30199400)
Co-Investigator(Kenkyū-buntansha)	OHKUSA Yasushi Osaka City University, Faculty of Economics, Associate Professor, 経済学部, 助教授 (60223757) 大日康央大阪市立大学, 経済学部, 助教授
Project Period (FY)	1997 – 1998
Project Status	Completed (Fiscal Year 1998)
Budget Amount *help	¥3,300,000 (Direct Cost: ¥3,300,000) Fiscal Year 1998: ¥1,000,000 (Direct Cost: ¥1,000,000) Fiscal Year 1997: ¥2,300,000 (Direct Cost: ¥2,300,000)
Keywords	R&D / Patent / Copy / Economic Growth / Scales of economies
Research Abstract	This research constructs an endogenous growth model which combines the quality ladder model and the variety expansion model. Households derive their utility from consumption of variety of products and enjoy a higher utility level from consumption of products of higher quality. Firms enter an imitation race and can imitate some brand-new products with a certain cost. After copying, monopolistic competition prevails and a new innovation race begins. If a firm succeeds in inventing a higher quality product, then it can take over the entire market of the product ; however, the existence of variety of products constrains the highest price which the successful firm can charge We show that the present model exhibits an inverted U-shape relationship between the market size and the growth rate. Relatively large and small economies grow slowly while middle sized economies grow fast. As for patent length, this research obtains the following results. The longer the patent length becomes the higher the level of innovation and this leads to higher growth. There exists an optimal patent length which maximizes the welfare when the rate of time preference is small, that is the households are not myopic.