PATENT LENGTH AND THE RATE OF INNOVATION

This paper models the effect of patent length on the rate-of-innovatio n and consumer welfare. We find that the patent length that maximizes the rate-of-innovation exceeds that which maximizes consumer welfare. We show a countervailing effect of patent length upon the ''size'' and ''frequency'' of innovation. Longer patents increase the size, but de crease the frequency of innovation. The patent lengths that maximize t he rate-of-innovation and welfare represent balance points between siz e and frequency. The divergence of the welfare maximizing and rate-of- innovation maximizing patent lengths has important policy implications that we briefly explore.