Patent Boxes and the Success Rate of Applications

Files in This Item:
File Description SizeFormat 
WP20_18.pdf312.41 kBAdobe PDFDownload
Title: Patent Boxes and the Success Rate of Applications
Authors: Davies, Ronald B.Kogler, Dieter FranzHynes, Ryan M.
Permanent link:
Date: Jun-2020
Online since: 2020-07-24T14:15:07Z
Abstract: Patent boxes significantly reduce the tax rate applied to income earned from a patent. Existing work finds that those reductions increase the number of patents. That said, not all patents are equally novel. In particular, the patent box encourages the submission of patents of marginal novelty, a selection effect that would reduce the average success rates of patents. At the same time, the increased return to patenting encourages additional effort in application preparation and prosecution, increasing suc- cess rates. While this predicts an ambiguous effect, due to lower financing costs, the net impact should be smaller for frequent innovators. We use data from applications to the European Patent Office from 1978 to 2017 and find that the introduction of a patent box increases the average success rate of applications by 4.4 percentage points, with the estimated effect becoming negative for frequent innovators. We further find that this effect is greater when boxes apply only to new innovations and when local development is required to access tax reductions. This suggests that for the frequent innovators, who form the bulk of submissions, patent boxes may indeed be encouraging the submission of marginally-novel applications.
Funding Details: European Commission Horizon 2020
metadata.dc.description.othersponsorship: International Tax Policy Forum
European Tax Policy Forum
Type of material: Working Paper
Publisher: University College Dublin. School of Economics
Start page: 1
End page: 58
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2020/18
Copyright (published version): 2020 the Authors
Keywords: Patent boxPatentsLikelihood of patent grant
metadata.dc.subject.classification: H2; O3
Language: en
Status of Item: Not peer reviewed
Appears in Collections:UCD Spatial Dynamics Lab Working Papers
Economics Working Papers & Policy Papers

Show full item record

Page view(s)

Last Week
Last month
checked on Sep 22, 2020


checked on Sep 22, 2020

Google ScholarTM


This item is available under the Attribution-NonCommercial-NoDerivs 3.0 Ireland. No item may be reproduced for commercial purposes. For other possible restrictions on use please refer to the publisher's URL where this is made available, or to notes contained in the item itself. Other terms may apply.