Effects of Patents versus R&D Subsidies on Income Inequality
Journal
Review of economic dynamics
ISSN
1094-2025
ISSN-Digital
1096-6099
Type
journal article
Date Issued
2018-07
Author(s)
Abstract
This study explores the effects of patent protection and R&D subsidies on innovation and income inequality using a Schumpeterian growth model with heterogeneous households. We find that although strengthening patent protection and raising R&D subsidies have the same macroeconomic effects of stimulating innovation and economic growth, they have drastically different microeconomic implications on income inequality. Specifically, strengthening patent protection increases income inequality whereas raising R&D subsidies decreases (increases) it if the quality step size is sufficiently small (large). An empirically realistic quality step size is smaller than the threshold, implying a negative effect of R&D subsidies on income inequality. We also calibrate the model to provide a quantitative analysis and find that strengthening patent protection causes a moderate increase in income inequality and a negligible increase in consumption inequality whereas raising R&D subsidies causes a relatively large decrease in both income inequality and consumption inequality.
Language
English
Keywords
R&D subsidies
Patents
Income inequality
Economic growth
HSG Classification
contribution to scientific community
HSG Profile Area
SEPS - Economic Policy
Refereed
Yes
Publisher
ScienceDirect
Publisher place
Amsterdam [u.a.]
Volume
29
Start page
68
End page
84
Subject(s)
Eprints ID
253507