When Do More Patents Reduce R&D?

While much literature examines invention and patentlicensure as separate research entities, this research examines therelationship between the motivation to invent and the motivation to patent aninvention. The research presents a model utilized to understand thisrelationship. In order to determine the impact of a firm's inventions upon their propertyrights, the following factors are considered: the technology being created, theinfluence of policy and the courts, and a firm's success at obtaining propertyrights for things it has not invented. The model's ability to study equilibrium and comparative static results isexamined, as are several propositions related to these phenomena. A welfareanalysis is considered important to investigate the impact of social planningupon the level of innovation and patenting. Overall, the model indicates that a firm's level of R&D positivelycorrelates with its tendency to patent innovations. However, the findings alsoindicate that the relationship between R&D and patenting levels mayexperience decreased patenting costs, ultimately resulting in decreased levelsof R&D. If increased patent costs indicate an increase in R&D, then perhaps apatent tax or more stringent patenting requirements may further increaseR&D levels. Recommendations for policymakers are discussed, and thelimitations of the model are explained. (AKP)