Patents and R&D. An Econometric Investigation Using Applications for German, Europeans and US Patents by German Companies

Based on the data of the first wave of the Mannheim Innovation panel,this paper explores the link between R&D expenditures and patents. Ourdata allow a detailed analysis of the firm size distribution of R&Dand patent applications at different patent offices. It is shown thatthe share of R&D performing firms is strictly increasing with firmsize. The share of firms applying for patents shows an even steeperincrease with firm size. Moreover, large firms more likely apply forpatents in more than one country. The home patent office seems to beespecially important for small firms. Using various count data models,the paper explores the relationship between R&D and patents at thefirm level. We carefully test several distributional assumptions forcount data models. A negbin hurdle model seems to be the mostappropriate count data model for our data as the decision to patentinventions and the productivity of R&D are ruled by differentmechanisms. Our estimates point towards significant returns to scaleof R&D. Furthermore, the empirical results can be interpreted towardsminor and insignificant spillover effects. Even after controlling fora variety of firm characteristics, firm size exhibits a large effecton the propensity to patent.

Licht, Georg and Konrad Zoz (1996), Patents and R&D. An Econometric Investigation Using Applications for German, Europeans and US Patents by German Companies, ZEW Discussion Paper No. 96-19, Mannheim, published in: Annales d’Economie et de Statistique.