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STATUS PREFERENCE AND THE EFFECTS OF PATENT PROTECTION: THEORY AND EVIDENCE

Published online by Cambridge University Press:  13 December 2016

Shiyuan Pan ,
Mengbo Zhang  and
Heng-Fu Zou
Shiyuan Pan*
Affiliation:
Zhejiang University
Mengbo Zhang
Affiliation:
University of California, Los Angeles
Heng-Fu Zou
Affiliation:
Central University of Finance and Economics
*
Address correspondence to: Shiyuan Pan, Center for Research of Private Economy and School of Economics, Zhejiang University, 38 Zheda Road, Hangzhou 310027, China; e-mail: shiyuanpan@zju.edu.cn.
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Abstract

We construct a growth model with status preference to explore the effects of patents on innovation and social welfare. We find a nonmonotonic effect of patent protection on innovation. Additionally, the growth-rate-maximizing degree of patent protection decreases when the strength of status preference is larger. The effect of patent protection on social welfare is ambiguous, depending on the strength of status preference. Moreover, wealth inequality widens as patent protection is reinforced. Finally, by using cross-section regression analysis, we document that a nonmonotonic relationship between patent protection and economic growth is statistically significant and that the growth-rate-maximizing degree of patent protection decreases with the strength of status preference.

Keywords

Patent ProtectionStatus PreferenceInnovationSocial Welfare
Type
Articles
Information
Macroeconomic Dynamics , Volume 22 , Issue 4 , June 2018 , pp. 837 - 863
Copyright
Copyright © Cambridge University Press 2016 

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Footnotes

The authors would like to thank the associate editor and two anonymous referees for their helpful comments and suggestions. S. Pan acknowledges financial support from the Key Project of the National Social Science Foundation of China (No. 15AJY003), the Program for New Century Excellent Talents in University (No. NCET-0453) and the Project of the Scientific Research Foundation for the Returned Overseas Chinese Scholars of Ministry of Education of China. Zhang acknowledges financial support from the State Scholarship Fund of China Scholarship Council. The usual disclaimer applies.

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