Patents, R&D subsidies, and endogenous market structure in a schumpeterian economy. (January 2016)

• Record Type: Journal Article
• Authors: Chu, Angus C.; Furukawa, Yuichi; Ji, Lei
• Is Part Of: Southern economic journal. Volume 82:Number 3(2016)
• Page Start: 809
• Page End: 825
• Publication Date: 2016-01
• Subjects: JEL Classification: O30 -- O40; Southern States -- Economic conditions -- Periodicals; Economics -- Periodicals; Economic history; Economics; Southern States; Periodicals; 330.975005
• DOI: 10.1002/soej.12122
• Languages: English
• ISSNs: 0038-4038

Abstract

Abstract : This study explores the different implications of patent breadth and R&D subsidies on economic growth and endogenous market structure in a Schumpeterian growth model. We find that when the number of firms is fixed in the short run, patent breadth and R&D subsidies serve to increase economic growth as in previous studies. However, when market structure adjusts endogenously in the long run, R&D subsidies increase economic growth but decrease the number of firms, whereas patent breadth expands the number of firms but reduces economic growth. Therefore, in accordance with empirical evidence, R&D subsidy is perhaps a more suitable policy instrument than patent breadth for the purpose of stimulating long‐run economic growth.