Ideas-Driven Endogenous Growth and Standard-Essential Patents

30 Pages Posted: 28 May 2020

See all articles by Albina Khairullina

Albina Khairullina

Ecole Polytechnique Fédérale de Lausanne

Andrei A. Kirilenko

University of Cambridge - Finance

Artem Neklyudov

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne); Swiss Finance Institute

Christopher L. Tucci

Ecole Polytechnique Federale de Lausanne - MTEI

Date Written: April 30, 2020

Abstract

In this paper, we study the impact of standard-essential status for patents on production possibilities of the economy and long-term growth. As we show, the innovators’ risk of losing the standard-setting game ex-ante attenuates the anticipation of a larger market share. Moreover, when the discovery rate of new technologies is smaller than the discounting rate of the monopoly profits, standards and standard- essential patents tend to be growth-reducing, despite a conjectured positive contribution of standards to the marginal productivity of human capital. Market failures associated with patent abuse have been treated historically by various measures ranging from compulsory licensing to imposing reasonable and non-discriminatory (FRAND) pricing on essential technologies. We show that mandated compulsory licensing has a negative impact on long-term growth, while a voluntary FRAND pricing together with faster rates of follow-up innovations may be growth-enhancing.

Keywords: Standard-Essential Patents, Technology Innovation, Endogenous Growth

JEL Classification: O33, O34, O41

Suggested Citation

Khairullina, Albina and Kirilenko, Andrei A. and Neklyudov, Artem and Tucci, Christopher L., Ideas-Driven Endogenous Growth and Standard-Essential Patents (April 30, 2020). Available at SSRN: https://ssrn.com/abstract=3589892 or http://dx.doi.org/10.2139/ssrn.3589892

Albina Khairullina

Ecole Polytechnique Fédérale de Lausanne ( email )

Quartier UNIL-Dorigny, Bâtiment Extranef, # 211
40, Bd du Pont-d'Arve
CH-1015 Lausanne, CH-6900
Switzerland

HOME PAGE: http://https://people.epfl.ch/albina.khairullina/?lang=en

Artem Neklyudov

University of Lausanne - School of Economics and Business Administration (HEC-Lausanne) ( email )

Unil Dorigny, Batiment Internef
Lausanne, 1015
Switzerland

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

Christopher L. Tucci

Ecole Polytechnique Federale de Lausanne - MTEI ( email )

Odyssea
Station 5
Lausanne, 1015
Switzerland
+41.21.693.0023 (Phone)
+41.21.693.0020 (Fax)

HOME PAGE: http://csi.epfl.ch

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