The Economic Analysis Of Patent System And Business Secret

With the age of knowledge economy, the impact of IP on economic growth has been getting more and more attention. Therefore, protection of IP has become the hot topic of jurists and economics. Based on discussing patent and business secret, two ways of IP protection, this paper has examined the choice of firms and policy makers.As two important ways to protect IP, patent and business secret are both antagonistic and complementary. And this relationship has very important impact on the choice of the firm and policy maker. First, this paper introduces the concept and characteristics of patent and business secret. What's more, we present some similarities and differences between them. Then, we build a two-firm static model based on a classic model, which discusses the patent strategy of the firm and the policy maker's behavior under the restriction of business secret.Different with other domestic and foreign papers, this paper finds that the innovator may not patent under the restriction of business secret, and the follower patent after he gets the innovation by reverse engineering. When patent protection is weak, innovator may find it's not worth applying for a patent. Because we suppose that the follower won't be imitated, he may patent after he gets the innovation in the same patent system. Then, there will be a "strange phenomenon" that the follower rather than the innovator gets the patent. Besides, we find the firm's behavior to maximize his profit may conflict with social welfare maximization. So, the policy maker should strike a balance between this, and guide the firm to coordinate with the policy.