Publication Type
Conference Paper
Version
publishedVersion
Publication Date
12-2023
Abstract
The paper studies a possible “dark side” of patent trade in enhancing the market power of monopolists. We explore the different effects of China’s 2008 tax reform on patent innovations and sales across industries. In particular, although easier patent trade leads to more patent creation, the new patents are disproportionately connected to existing monopolists and are more likely to be acquired by them. Using an endogenous growth model with patent trade, we show that subsidizing patent trade could skew investors’ research to appeal to the monopolists, increase the latter’s monopoly power, and reduce social welfare. An optimal subsidy policy for patent trade should be contingent on the initial level of misallocation in the invention market.
Keywords
Endogenous growth, innovations, patent trade, misallocation, monopoly power, optimal pro-patent trade policy
Discipline
Macroeconomics
Research Areas
Macroeconomics
Publication
11th Shanghai Macroeconomics Workshop
Publisher
Oxford University Press (OUP): Policy E - Oxford Open Option D
City or Country
Shanghai, China
Citation
WEI, Shang-jin; XU, Jianhuan; YIN, Ge; and ZHANG, Xiaobo.
Market for patents, monopoly, and misallocation. (2023). 11th Shanghai Macroeconomics Workshop.
Available at: https://ink.library.smu.edu.sg/soe_research/2711
Copyright Owner and License
Authors
Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial-No Derivative Works 4.0 International License.