Trade, Innovation and Optimal Patent Protection
(University of Zurich)
with Simon Lepot, Thomas Sampson and Julian Schärer
This paper studies optimal patent policy in open economies. By integrating Helpman-Krugman and Eaton-Kortum trade theory, we develop a quantitative model of patenting that captures the trade-off between the innovation and market power effects of patent policy. We calibrate the model to estimate patent protection by destination and the geography of innovation. Counterfactual analysis shows that stronger patent protection has global benefits, but local costs, resulting in inefficiently weak protection. There are large potential gains from global cooperation, but realizing these gains requires larger, more innovative economies to offer stronger protection. By pushing towards policy harmonization, the TRIPS agreement has little effect on global welfare but hurts developing countries.
The seminar will be in presence, DEMS Seminar Room 2104, Building U7-2nd floor