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Intellectual Property Rights and Innovation: Evidence from Health Care Markets

In: Innovation Policy and the Economy, Volume 16

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  • Heidi L. Williams
Abstract
A long theoretical literature has analyzed optimal patent policy design, yet there is very little empirical evidence on a key parameter needed to apply these models in practice: the relationship between patent strength and research investments. I argue that the dearth of empirical evidence on this question reflects two key challenges: the difficulty of measuring specific research investments, and the fact that finding variation in patent protection is difficult. I then summarize the findings of two recent studies which have made progress in starting to overcome these empirical challenges by combining new datasets measuring biomedical research investments with novel sources of variation in the effective intellectual property protection provided to different inventions. The first study, Budish, Roin, and Williams (forthcoming), documents evidence consistent with patents affecting the rate and direction of research investments in the context of cancer drug development. The second study, Williams (2013), documents evidence that one form of intellectual property rights on the human genome had quantitatively important impacts on follow-on scientific research and commercial development. I discuss the relevance of both studies for patent policy, and discuss directions for future research.
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Suggested Citation

  • Heidi L. Williams, 2015. "Intellectual Property Rights and Innovation: Evidence from Health Care Markets," NBER Chapters, in: Innovation Policy and the Economy, Volume 16, pages 53-87, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberch:13586
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    Cited by:

    1. Lauren Cohen & Umit G. Gurun & Scott Duke Kominers, 2019. "Patent Trolls: Evidence from Targeted Firms," Management Science, INFORMS, vol. 65(12), pages 5461-5486, December.
    2. Markus Nagler & Monika Schnitzer & Martin Watzinger, 2022. "Fostering the Diffusion of General Purpose Technologies: Evidence from the Licensing of the Transistor Patents," Journal of Industrial Economics, Wiley Blackwell, vol. 70(4), pages 838-866, December.
    3. Filippo Mezzanotti, 2021. "Roadblock to Innovation: The Role of Patent Litigation in Corporate R&D," Management Science, INFORMS, vol. 67(12), pages 7362-7390, December.
    4. Martin Watzinger & Thomas A. Fackler & Markus Nagler & Monika Schnitzer, 2020. "How Antitrust Enforcement Can Spur Innovation: Bell Labs and the 1956 Consent Decree," American Economic Journal: Economic Policy, American Economic Association, vol. 12(4), pages 328-359, November.
    5. Ajay Agrawal & Joshua Gans & Avi Goldfarb, 2019. "Economic Policy for Artificial Intelligence," Innovation Policy and the Economy, University of Chicago Press, vol. 19(1), pages 139-159.
    6. Margaret K. Kyle, 2019. "The Alignment of Innovation Policy and Social Welfare: Evidence from Pharmaceuticals," NBER Chapters, in: Innovation Policy and the Economy, Volume 20, pages 95-123, National Bureau of Economic Research, Inc.
    7. Kalcheva, Ivalina & McLemore, Ping & Pant, Shagun, 2018. "Innovation: The interplay between demand-side shock and supply-side environment," Research Policy, Elsevier, vol. 47(2), pages 440-461.
    8. Bhaven N. Sampat, 2018. "A Survey of Empirical Evidence on Patents and Innovation," NBER Working Papers 25383, National Bureau of Economic Research, Inc.
    9. Zhang, Meiyang & Zhu, Xuezhong & Liu, Rui, 2024. "Patent length and innovation: Novel evidence from China," Technological Forecasting and Social Change, Elsevier, vol. 198(C).
    10. Rasmus Arler Bogetoft & Peter Bogetoft, 2022. "Market entrance, patents, and preliminary injunctions: a model of pharmaceutical patent litigation," European Journal of Law and Economics, Springer, vol. 53(3), pages 379-423, June.
    11. Watzinger, Martin & Fackler, Thomas A. & Nagler, Markus, 2017. "How Antitrust Enforcement Can Spur Innovation," Rationality and Competition Discussion Paper Series 4, CRC TRR 190 Rationality and Competition.

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    More about this item

    JEL classification:

    • I1 - Health, Education, and Welfare - - Health
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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