1990/01/01 by Paul Klemperer · 1 citation
Business, Management and Accounting · Economics, Econometrics and Finance · #Firm Innovation and Growth #Innovation and Socioeconomic Development #Intellectual Property and Patents
paper · doi:10.2307/2555498
openalex publication_date 1990/01/01 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/30
I explore the trade-off between a patent's length (that is, its lifetime) and its width (that is, its scope of coverage). A wider patent generally reduces the distortion of consumers' choices between the patented brand of the product and unpatented, lower-priced varieties sold by competitors but also permits higher prices, which increase (relative to profits) the deadweight losses from consumers switching consumption out of the product class. I show under what conditions infinitely lived but very narrowly focused patents are the socially efficient way to reward innovation and under what conditions very short-lived but very broad patents are optimal.