Status Preference and the E¤ects of Patent Protection: Theory and Evidence

We build a growth model with status preference to explore the e¤ects of patent protection on innovation and social welfare. The main results are as follows. There exists a non-monotonic relationship between patent protection and innovation, and the growth-rate-maximizing degree of patent protection decreases with the strength of status preference. Moreover, the e¤ect of patent protection on social welfare is ambiguous, depending on the strength of status preference. Finally, a cross-section regression based on a cross-country dataset is employed to investigate the empirical evidence of our theory. A signi\u85cantly non-monotonic relationship between patent protection and economic growth is found when the status preference is considered