Innovation Policy and the Economy, Volume 8

Innovation and Economic Growth, Intellectual Property and Patents

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Adam B. Jaffe, Josh Lerner and Scott Stern


Volume 8 in NBER Book Series: Innovation Policy and the Economy, eds. Adam B. Jaffe, Josh Lerner, and Scott Stern, MIT Press, Cambridge MA, 2008


Volume 8 of this series discusses the effects of academic research and patent reform on innovation.

Policy Relevance

Patent policy affects the behavior of basic science researchers at universities. Also, if patents are too difficult to challenge they may deter innovation.

Main Points

  • The spread of patents in biomedical research might be expected to slow innovation if it prevents researchers from building on past results. However, researchers who protect their work through secrecy and by refusing to share research materials are a larger impediment to the flow of information.
  • Researchers affiliated with universities have contributed to economic growth through their innovations, but the universities themselves sometimes slow the commercialization of innovations. University technology transfer offices (TTOs) can work most efficiently by aiming to maximize the number of patents transferred and the speed at which transfers occur.
  • Firms frequently run economic experiments like introducing new products or novel pricing schemes; such experiments contribute to economic growth (at some cost) and were conducted at a rapid pace during the development of the commercial Internet. If “net neutrality” is not maintained, incentives for economic experiments in the Internet sector will decrease.
  • Inventions may benefit many people greatly but are often costly to develop; to incentivize the creation of useful inventions, inventors are granted economic rights to their ideas. However, if these rights are too strong other inventors will be stymied and consumers will bear excessive costs. The US could ameliorate these problems by making it easier to challenge patents.
  • Overlapping and conflicting patents make the development of new technologies and products difficult; this problem can be partly solved by patent pools, arrangements by which patent holders can share patent rights with one another. Historically patent pools have been viewed skeptically by antitrust regulators, but under broad conditions they are unlikely to result in harm to consumers.


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