Document Type
Article
Abstract
Many economic models deal with the concepts of static efficiency and distribution. To distribute resources efficiently, competition is one of the essential factors. Another important role of competition is to act as an engine of economic development through stimulating the creative initiative of entrepreneurs. The latter aspect has complex implications due to matters related to patents and competition policy. On the one hand, there is a positive correlation between competition and economic development (total factor productivity [TFP]). On the other hand, there is an inverted U-shaped relationship between competition and patents. The authors show that competition discourages laggard firms from innovating, but encourages neck-and-neck firms to innovate and leads to an inverted U-shaped relationship between the price cost margin and the number of patents produced.
From the viewpoint of competition, there is room for consideration of whether patents have a positive relationship with economic development with or without competition policy. We study the relationships among patents, competition policy, and development by using country panel data and obtain several results regarding both old and new problems in industrial structure and institutions.
This Essay is comprised of eight parts, Part II is a brief description of competition and economic growth and its extensions, with a focus on Competition and Innovation: An Inverted-U Relationship, written by Philippe Aghion and co-authors. Part III explains a model, and Part IV delineates the data. Part V shows the estimation results, Part VI describes the robustness check, and Part VII provides a discussion and caveats. Part VIII consists of concluding remarks.
Recommended Citation
Koki Arai,
Patents, Competition Policy, and Growth,
18 J. Tech. L. & Pol'y
(2013).
Available at: https://scholarship.law.ufl.edu/jtlp/vol18/iss1/4