Patents & Technological Change How much R&D exists without patents? How do patents perform as an incentive system relative to alternatives? How long should patents last? This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Some Distinctions… Patents Copyrights Trademarks A patent gives the holder exclusive rights to a new product, process, substance or design. In the US (since 1994) you get 20 years of protection. There is an exception for new designs, which get 14 years. Copyrights are for artistic, dramatic, literary or musical works. Copyrights to business last 95 years (with some complications – see p.529 of the text) and life plus 70 years for individuals. Copyrights protect the particular expression of the idea…and not merely the idea itself. This is distinct from a patent. Trademarks: words, symbols or other marks that distinguish a good or service provided by one firm. This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Incentives for Innovation Public Goods and ideas Without patents why develop a new drug? Virtues of Patents Research Disclosure This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Modeling Research & Development Assumptions Identical firms, 1 research project each n: Current number of firms/projects Constant MC = m = 1 C(n) = total research cost = nm = n ρ(n) = probability of at least one success R&D occurs at t=0. If successful, then society benefits in later periods (t=1,2,…) B = social benefit of the discovery B ρ(n)= expected social benefit This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Table 16.4: Socially Optimal R&D This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Figure 16.1-Total Benefits, Costs This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Figure 16.1-Marginal Benefits, Costs This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

No Government Incentives How much research will private firms do without government subsidies? None. They bear the marginal cost of 1 and get none of the benefit. This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Government Incentives for R&D R&D tax deductions Prizes Joint ventures Patents This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Optimal Patent Length This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

How much research is done? This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.

Table 16.5: Optimal Patent Length This slideshow was written by Ken Chapman, but is substantially based on concepts from Modern Industrial Organization by Carlton and Perloff, 4th edition, McGraw-Hill.