Does Patenting Increase the Private Inventives to Innovate ? A Microeconometric Analysis

The role played by the patent system as an innovation incentive is at the center of an important current debate. The relevance of the patent system for the development of high-tech industries has been put into question. This paper adds to the prior evidence by looking at the relationship between patent rights and innovation performance in French manufacturing over the period 1997-1999. In order to sort problems of endogeneity out, we use a structural model of research, innovation and patenting. In particular, since the type of innovation (product, process) may drive appropriability conditions, the model takes this dimension into account. The empirical results are clear-cut : patents promote significantly product innovations but not process innovations. Similarly, the patent premium increases with the value of product innovations but is not directly affected by the value of process innovations.