On the Optimality of the Patent Renewal System
Volume: Volume 30, No. 2
Issue: Summer 1999
Pages: pp. 181-196
Authors: Suzanne Scotchmer
Title: On the Optimality of the Patent Renewal System
Abstract: The patent system is mainly a renewal system: the patent life is chosen by the patentee in return for fees. I ask whether such a system can be justified by asymmetric information on costs and benefits of research. In such a model I show that renewal mechanisms (possibly with subsidies) are equivalent to direct revelation mechanisms and therefore cannot be improved on, regardless of the objective function. Under plausible circumstances, patents should have a uniform life, rather than varying in length, as typically occurs under a renewal system.
JEL Classification
Intellectual Property Rights: National and International Issues patents, copyrights
(O340)
Technological Change Innovation Research and Development: General
(6210)
Technological Change and Innovation (6211)