Abstract

• DOI: https://doi.org/10.1108/S0573-8555(2005)0000272002
• Date: 21 May 2005
• Published date: 21 May 2005
• Pages: vii-vii

Abstract

Innovation is universally recognized as an important source of economic

growth. Patents may be considered as a potential measure of innovation. As

such, patents may alter isoquant maps, and measuring their elasticities is both

intuitively and empirically appealing. This book investigates the impact of US

patent activity on technical changes in 35 industries given in the KLEM

(Jorgenson, 1996) data set for the period 1958-1996. Four patent variables,

namely total patent applications, total patents granted, unsuccessful patent

applications and foreign patents granted, are introduced as technology-changing

parameters into the generalized Fechner-Thurstone (GFT) production function

to determine the effect on the elasticity of the marginal rate of technical

substitution (MRTS) between inputs of the GFT production function over time.

It is found that all four patent variables have significant impacts on the MRTS

between various production inputs over time, with foreign patents granted being

the most "effective" parameter, and unsuccessful patent applications the least

effective. In addition, the elasticity of the MRTS between materials and energy

is found to be the most affected by patent activity, and that between materials

and labor the least. The extent of technical change by patent activity varies

across industries. Patent activity is found to be less effective as technology

changers in some traditionally high patenting industries and more effective in

others, which indicates that there are significant spillover effects of patents.

Patent activity is found to have the greatest impact on technical change in the

metal mining industry and the least impact in the chemicals industry.