Wednesday, March 26, 2008
Posted by Shubha Ghosh
Professor James Bessen and Michael Meurer have recently published "Patent Failure" available from Princeton University Press. This weekend The University of Georgia is hosting a day long symposium devoted to the book. This event promises to be quite stimulating. I highly recommend the book, which brings together lots of scholarly studies on the patent system and offers a provocative solution: reform the patent system so that it better serves its notice function. As I plan to state as a participant in the symposium, I do not fully agree with this proposal, largely because I am not sure disclosure by itself is sufficient to promote innovation if there are no adequate institutions to assess the quality of the information being disclosed. But perhaps more on that later...
For readers of this blog, the most interesting chapter may well be the fourth, which provides a survey of empirical research relating to innovation, competition, and the patent system. The authors look at four studies: historical, cross-country, "natural" experiments based on patent reform, and studies looking at the relationship between competition, imitation, and innovation. Ther fourth of these is the most interesting, particularly the citation to Michael Gort and Steven Klepper, "Time Paths in the Diffusion of Production Innovations," Economic Journal 92 (367): 630-53 (1982). Gort and Klepper identify four stages of the product cycle: start-up, entry, shake-up, and concentration leading to a few dominant firms. Their study finds innovation is the greatest during the second and third stages of the cycle.