Patents and Research Investments: Assessing the Empirical Evidence
Eric Budish, Benjamin N. Roin, Heidi Williams
American Economic Review · 2016 · Volume 106 · Issue 5
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.
Keywords
Firm Behavior: Theory, Intertemporal Firm Choice, Investment, Capacity, and Financing, Capital Budgeting, Fixed Investment and Inventory Studies, Management of Technological Innovation and R&D, Intellectual Property and Intellectual Capital
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