We develop a new method to estimate the returns to R&D, their distribution, and their determinants. We model a continuous optimal treatment with outcome heterogeneity, where the treatment outcome depends on the applicant’s investment. The model takes into account application costs, and...

We argue that a patent system makes collusion among innovators more difficult. Our simple argument is based on two properties of the patent system. First, a patent not only protects against infringement but also against retaliation by former collusion members. Second, a deviator has an equal...