Seminar in International Economics: Patent Boxes and the Success Rate of Patent Applications (Online event) | 08.04.2021

The Competence Centre for International Economics Research (FIW) kindly invites to participate in the Seminar in International Economics on the topic

Patent Boxes and the Success Rate of Patent Applications

Ronald B. Davies
(University College Dublin)

Thursday, 8th of April 2021, 4:00 p.m. (CET)

Registration link:
This is an online event via Zoom. Please register for the dial-in link. The link will be sent shortly before the event.

The presentation is based on a paper co-authored with Ryan Hynes and Dieter F. Kogler.

Patent boxes significantly reduce the tax rate applied to income earned from a patent. Existing work finds that those reductions increase the number of patents. That said, not all patents are equally novel. In particular, the patent box encourages the submission of patents of marginal novelty, a selection effect that would reduce the average success rates of patents. At the same time, the increased return to patenting encourages additional effort in innovation development and application preparation, increasing success rates. While this predicts an ambiguous effect, by exploiting the time dimension of these responses, we are able to examine their relative size. Using data from applications to the European Patent Office from 1978 to 2017 and find that the introduction of a patent box increases the average success rate of applications from the large innovators who make up the majority of applications by 6.9 percentage points. This impact only materializes two years after a patent box takes effect, suggesting that improved research effort is the dominant response by rms.

The seminar series is organised by the Vienna Institute for International Economic Studies (wiiw) in co-operation with FIW, the Centre of Competence in International Economics. The seminar provides a forum for presentation and discussion of recent academic research in the field of international economics.