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One of the most well known ex post bases for patents is that patents facilitate the diffusion of innovation and knowledge-spillovers, which are important for long term innovation and economic growth. Diffusion is especially critical in industries marked by incremental and cumulative innovation, where innovation builds on existing inventions.
In a new working paper, Professor Petra Moser, of Stanford and NBER, looks at the relationship between patents and diffusion. Does Patenting Help to Diffuse Knowledge Spillovers? Evidence from the Geography of 19th-Century Innovations (2007), available at SSRN. Moser argues that patenting decreases geographic localization of innovation and knowledge spillovers. Without patents, innovation and knowledge would primarily diffuse to local-established networks, and not spread across a greater geography. From information on nearly 5000 inventions exhibited at the 1851 Crystal Palace Fair in London, Moser further finds that: --> Innovation in industries with greater patenting appears more diffused, innovation is more localized in industries that rely more on patent alternatives such as secrecy.
--> Industries with less patenting tend to be more geographically concentrated, industries with heavier patenting are less concentrated.
--> The effect of patents to increase diffusion is similar to that of exogenous scientific advances in weakening geographic localization of innovation and knowledge spillovers. Moser explicitly points out that by addressing diffusion, her research goes beyond the ex ante public goods theory for patents: “The results of this paper also suggest that patent laws may fulfill a role that differs from the traditional, static view of patents as a means to create incentives to invent.” Moser adds that patents, by encouraging diffusion of innovation and knowledge spillovers, without necessarily incenting invention ex ante, may increase overall innovation. Thus, even if patents do not incent new R&D and inventions, they can play an important role in differentiating innovation and economic growth within and across countries.
posted by Noel Le @ 5:04 PM | Academia, Patents
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