Optimal Patent Design
Patents provide a patentee with a degree of monopoly power over a region of product space. The “breadth” and “duration” of patents are policy choices. Increasing patent breadth and duration will ceteris paribus increase the rent, which an individual inventor could earn from a commercially successful invention. However, the precise nature of the relationship between patent policy and the rate of societal technical advance, which is stimulated by a given patent design, is not well understood. In this chapter, the authors novelly investigate this issue using an agent-based modeling approach. The simulation results obtained raise questions about the real utility of patent policy in promoting technological advance and suggest that other policy instruments are actually more important.