Patent Boxes and the Success Rate of Applications

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Title: Patent Boxes and the Success Rate of Applications
Authors: Davies, Ronald B.Hynes, Ryan M.Kogler, Dieter Franz
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Date: 21-Apr-2021
Online since: 2021-04-19T12:31:48Z
Abstract: Patent boxes significantly reduce the corporate tax rate applied to income earned from a patent. This incentivizes firms to increase the likelihood of a patent application being granted by creating more novel research and using more successful legal representation when filing the application. Conversely, it supports submitting applications for marginally novel innovations that otherwise would not have been submitted, lowering the probability of success. We use data from applications to the European Patent Office from 1978 to 2019 and find that the introduction of a patent box increases the average success rate of applications from large, corporate innovators by 6.9 percentage points. This impact only materializes two years after a patent box takes effect, suggesting that improved research effort is the dominant response by firms. Therefore patent boxes may help to increase innovation novelty and improve the overall quality of research.
Item notes: This item supersedes WP2020/18 at (withdrawn)
Funding Details: European Commission Horizon 2020
Funding Details: 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: 57
Series/Report no.: UCD Centre for Economic Research Working Paper Series; WP2021/09
Copyright (published version): 2021 the Authors
Keywords: Patent BoxPatentsApplication SuccessCorporate Taxation
JEL Codes: H25; O31; O32
Language: en
Status of Item: Not peer reviewed
This item is made available under a Creative Commons License:
Appears in Collections:UCD Spatial Dynamics Lab Working Papers
Economics Working Papers & Policy Papers

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