Economic Analysis Of The Patent System

As one kind of incentive mechanism, the patent system holds the extremely important status in the economic system, it involves to the technical innovation, the knowledge accumulation, the industrial transformation, the economic growth, international trade, international intellectual property rights dispute and so on. If considered as the tool substituting for commercial trade secret, the patent system also possibly can affect how to form an organization.According to the usual classification, this thesis has analyzed the patent system from the two sides of positive economics and normative economics. In analysis from the perspective of positive economics, our primary intention is to discuss what is patent system and how it function. When we analyzed from the perspective of normative economics, what we concern is that when facing t the different patent policy tool, the social planner should choose what type of the policy combination.This thesis take the evolutionary process of studying patent system as a clue, inspected the discrete innovation, two stages cumulative innovation and the long sequence cumulative innovation separately. Through the research, we discovered as follows:1st, when there exist the asymmetric information, the second-best patent system is composed of the patent breadth that are as wide as possible and the discriminated patent length which can utilize personal information. In the patent system, patentability is the result of executing shutdown strategy of the social planner.2nd, the innovators play game and by which what form of license is offered is determinated internally. That is to say, it is possible that both ex-ante license and ex-post license appeared. As far as the function of license is concerned, ex-ante license and ex-post license are different. The initial innovator can make use of ex-ante license to prevent second-generation innovator from non-innovating. Besides, the initial innovator can predate the rent of the second-generation innovator by ex-post license. Although the patent lawsuit can cause the rent diffusion, thus reducing the sum of innovators' profit, sometimes, yet it still is the dominant choice of the initial innovator.3rd, completely lagging patent breadth can not offer enough innovation incentive to the innovators. Small leading patent breadth can enhance the social innovation investment level. But, when very big, then it can inhibit the innovation investment. Just patentability is unable to incentive innovation, and if social planner want to drive innovation by patentbility, it have to coordinate with the leading patent breadth.