Welfare analysis of alternative patent policies for software innovations

We present a duopoly model that extends existing patent policy design models in the economics literature to formalize the links among the patent policy levers set by public policy (patent height and width), the strategic decisions made by firms (RD (2) an increase in patent height may increase or decrease RD (3) while enforced patents will improve innovator profits they may worsen imitator profits, consumer welfare, or both and may even worsen total social welfare; (4) the optimal (social welfare maximizing) policy design is characterized by a relatively high patent height and moderate patent width.

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