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Do poor people like different patents to rich people?

By Johanna Gibson, David Pearce, Jeremy Phillips and Ilanah Simon.

That is the question - simplified - posed by a new paper by the economist Christian Kiedaisch of the ETH Zurich. The paper examines distributional implications of different patent policies. The proposed mechanism is that an increase in patent length increases the share of monopolized industries so that relatively more goods are sold at a markup. However, markups decrease in the share of monopolized industries and the rich benefit more from this effect than the poor as they consume a larger share of patented goods than the poor. While both the rich and the poor benefit in a similar way from an increase in the rate of growth, the poor loose more in terms of current consumption than the rich if patent length increases and because of that, they prefer shorter patents.

The author then examines the preference for another quality of patents which he terms "patent breadth", roughly capturing the deterrent effect of patents on entry into the market (scope of protection and ease of enforcement). He concludes that an increase in patent breadth increases innovation incentives so that a given rate of growth can be attained with long and narrow or short and broad patents (lawyers' toenails tend to curl when the scope of protection of a patent is thus simplified...). If the relative per capita labour income of the poor is not too large, they prefer short and broad patents while the rich prefer long and narrow patents. If, on the other hand, the poor are so poor that they can only afford to consume nonpatented goods, they are in favour of stronger patent protection which leads to a larger rate of growth.

As you can imagine, the whole thing is a lot more technical and complicated than this short post, so read the paper if your curiosity has been piqued.

The image is a creative-commons licensed photo of a street scene in Haiti by Michelle Brea- hanging on- . I wonder whether the depicted guy prefers short and broad patents or is in favour of stronger patent protection...

Full post as published by IPKat on July 27, 2010 (boomark / email).