Symbiotic Competition and Intellectual Property

47 Pages Posted: 10 Jan 2023 Last revised: 23 Sep 2023

See all articles by Rafael R. Guthmann

Rafael R. Guthmann

Universidad Alberto Hurtado

David M. Rahman

University of Minnesota - Twin Cities

Date Written: September 15, 2023


According to Nordhaus, the optimal life of a patent T* trades off the “embarrassment” of monopoly with motivating innovation, given that imitators would otherwise copy inventions and, in competing with innovators, reduce their profit, hence their incentive to innovate. In this paper, we extend this argument through a semi-endogenous growth model with follow-on innovations, knowledge spillovers and imperfectly elastic labor supply. We calibrate this model to the US economy and find T* between 8 and 14 years, in contrast with the current global standard of 20. A decomposition of T* suggests that knowledge spillovers are quantitatively just as important as market power. We also find that optimal patent policy depends crucially on the distribution of spillovers across industries. As such, we argue for a macroeconomic approach to patent policy.

Keywords: Optimal life of a patent, knowledge spillovers, semi-endogenous growth.

JEL Classification: D43, O11, O33, O34

Suggested Citation

R. Guthmann, Rafael and Rahman, David M., Symbiotic Competition and Intellectual Property (September 15, 2023). Available at SSRN: or

Rafael R. Guthmann (Contact Author)

Universidad Alberto Hurtado ( email )

Casilla 14446
Correo 21

David M. Rahman

University of Minnesota - Twin Cities ( email )

4-101 Hanson Hall
1925 Fourth Street South
Minneapolis, MN 55455
United States


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