New SNSF grant for Prof. de Rassenfosse

Investment in innovation activities requires government support. This point is well accepted by economists, who acknowledge the market failures that plague innovation activities. A series of policy tools have been put in place to support R&D investment, including, but not limited to, tax incentives, subsidies and the patent system. The patent system is one of the most controversial innovation policy tools. Its economic rationale involves a trade-off between the static inefficiency of a monopoly right conferred on patented inventions and the dynamic efficiency of encouraging R&D investments. Some scholars and business groups argue that patent protection is currently too strong (e.g., regarding software) whereas others point to a too weak patent system (e.g., regarding pharmaceuticals). In reality, evidence on the overall economic effects of the patent system is still patchy.

The overarching objective of the present proposal is to study the economic effects of the patent system. It exploits novel data on patents related to products, which are being collected by Prof. de Rassenfosse (see http://www.iproduct.io). The fact that we are now able to track patents that are associated with products is a major advancement in the field, and one that unlocks promising research opportunities. The objective is met by conducting three specific studies that will provide novel insights on the economic value of patents. The project assesses the impact of patents on product value using three approaches and a variety of empirical techniques such as panel regression models and discrete choice experiments. This project will contribute to scholarly and policy discussions about the real economic effects of the patent system. Its questions have far-reaching implications, for the patent system has the potential to help – or hinder – follow-on innovations. Sound empirical evidence on the patent system’s performance is thus critical for innovation policy and, ultimately, for technological progress.