Patents RD subsidies and endogenous market structure in a Schumpeterian economy

This study explores the different implications of patent breadth and RD subsidies on economic growth and endogenous market structure in a Schumpeterian growth model. We fend that when the number of firms is fixed in the short run, patent breadth and R&D subsidies serve to increase economic growth as in previous studies. However, when the number of firms adjusts endogenously in the long run, RD subsidies increase economic growth but decrease the number of firms,whereas patent breadth expands the number of firms but reduces economic growth. Therefore, RD subsidy is perhaps a more suitable policy instrument than patent breadth for the purpose of stimulating long-run economic growth.