NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Does Compulsory Licensing Discourage Invention? Evidence From German Patents After WWI

Joerg Baten, Nicola Bianchi, Petra Moser

NBER Working Paper No. 21442
Issued in July 2015
NBER Program(s):Development of the American Economy, Law and Economics, Productivity, Innovation, and Entrepreneurship

This paper investigates whether compulsory licensing – which allows governments to license patents without the consent of patent-owners – discourages invention. Our analysis exploits new historical data on German patents to examine the effects of compulsory licensing under the US Trading-with-the-Enemy Act on invention in Germany. We find that compulsory licensing was associated with a 28 percent increase in invention. Historical evidence indicates that, as a result of war-related demands, fields with licensing were negatively selected, so OLS estimates may underestimate the positive effects of compulsory licensing on future inventions.

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Document Object Identifier (DOI): 10.3386/w21442

Published: Joerg Baten, Nicola Bianchi, Petra Moser, Compulsory licensing and innovation – Historical evidence from German patents after WWI, Journal of Development Economics, Volume 126, 2017, Pages 231-242, ISSN 0304-3878, https://doi.org/10.1016/j.jdeveco.2017.01.002.

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