In this paper, we study the determinants of patent quality and volume of patent applications when inventors care about perceived patent quality. We analyze the effects of various policy reforms, specifically, a proposal to establish a two-tiered patent system. In the two-tiered system, applicants can choose between a regular patent and a more costly, possibly more thoroughly examined, 'gold-plate' patent. Introducing a second patent-tier can reduce patent applications, reduce the incidence of bad patents, and sometimes increase social welfare. The gold-plate tier attracts inventors with high ex-ante probability of validity, but not necessarily applicants with innovations of high economic value.
MSU Digital Commons Citation
Atal, Vidya and Bar, Talia, "Patent Quality and a Two-Tiered Patent System" (2014). Department of Economics Faculty Scholarship and Creative Works. 53.
Atal, V., & Bar, T. (2014). Patent quality and a two‐tiered patent system. The Journal of Industrial Economics, 62(3), 503-540.