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Patent Policy and Income Distribution

69 Pages Posted: 8 May 2010  

Christian Kiedaisch

University of Zurich - Department of Economics

Date Written: December 2, 2009

Abstract

Within the context of an endogenous growth model with nonhomothetic preferences and income distribution, this paper analyzes whether there might be disagreement between rich and poor consumers about the optimal patent policy. In equilibrium, the poor and the rich differ with respect to the share of differentiated goods that they consume and an increase in the length of patents increases the rate of growth and reduces current consumption of the poor more than that of the rich. Consequently, the poor like shorter patents or patents that are enforced with a lower probability. For given innovation incentives the poor prefer short and broad patents while the rich prefer long and narrow patents. Infinitely lived patents are optimal if the rich can compensate the poor with transfer payments.

Keywords: patent policy, inequality, growth, nonhomothetic preferences

JEL Classification: O34, D30, L16, O43

Suggested Citation

Kiedaisch, Christian, Patent Policy and Income Distribution (December 2, 2009). Available at SSRN: https://ssrn.com/abstract=1600069 or http://dx.doi.org/10.2139/ssrn.1600069

Christian Kiedaisch (Contact Author)

University of Zurich - Department of Economics ( email )

Mühlebachstrasse 86
MUB - F 301
Zurich, 8008
Switzerland
+41 44 634 55 79 (Phone)

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