Optimal patent design: An agent-based approach

Although significant attention is given to the study of intellectual property rights (IPR) in economic and other literatures our understanding of the impact of these rights on the process of technological advance is surprisingly incomplete. In this paper we focus on one form of IPR, namely patents. An important and open question faced by policy-makers is what form of patent regime will encourage the fastest rate of technological progress in a society. It is difficult to address this question using historical empirical data as the legal, cultural and technological environments (to name but a few of the factors which could impact on the effect of a given patent regime) do not remain constant over time. Consequently, in this study we novelly employ an agent-based methodology in order to isolate and examine the rate of technological advance that different patent regimes produce. The simulation results indicate that, perhaps counter intuitively, patent policy may not in fact be an effective means of driving societal technological advance.