As intellectual property chapters are now regularly part of free trade agreements, countries need to have a clear view of what elements of a patent system will encourage domestic innovation and what elements will simply raise the cost of goods and services. Drawing on the range of empirical...

Economists assume there is new knowledge or know-how embedded in patented inventions. This new knowledge should result in spillover benefits which can provide dynamic efficiency gains to offset the static efficiency losses of the patent system. Unfortunately this assumption is out-of-date....