DP7029 On the price elasticity of demand for patents

Author(s): Gaétan de Rassenfosse , Bruno van Pottelsberghe de la Potterie

Publication Date: November 2008

Keyword(s): patent cost , patent systems , patenting fees , price elasticity , propensity to patent

JEL(s): O30 , O31 , O34 , O38 , O58

Programme Areas: Industrial Organization

Link to this Page: www.cepr.org/pubs/dps/DP7029.asp.asp

This paper investigates whether patent fee policies are a potential factor underlying the boom in patent applications observed in major patent offices. We provide the first panel-based evidence suggesting that fees affect the demand for patents in three major patent offices (EPO, USPTO and JPO), with a price elasticity of about -0.4 (similar to that of the residential demand for oil or water). The laxity of fee policies adopted by patent offices over the past 25 years therefore contributed, to a significant extent, to the rising propensity to patent observed since the mid-nineties. This is especially true at the European Patent Office, which has dramatically decreased its fees since the mid-1990s.