14 Analysis of Behavior to Carry Out R&D and Patent Filingunder Evolutionary Game Theory（*）
Research Fellow: Ryosuke Ishii
This study focuses on the trade-off between the incentive for R&D and the adverse effects ofmonopoly resulting from the granting of a patent right, and analyzes a model of economic theory that
explicitly takes account of the influence of these factors on social welfare. While integrating into the model
the negative effects on the economic growth rate arising from the "strength of a patent right” and "the very
existence of a patent right,” which have not been clearly defined in previous theoretical studies, this study
introduces factors of evolutionary game theory into the process of deciding the volume of R&D investment,
and considers an endogenous decision on R&D investment to be made by firms. In this study, exogenous
parameters, such as the strength of a patent right and the strictness of the criteria for the granting of apatent right, are interpreted as policy variables, with a view to finding out the qualitative nature of thepolicy variables that can maximize social welfare that is the economic growth rate applied as an indicator. In
addition, consideration is also made as to how a policy decision affects economic growth in the context ofdetermining an optimal duration of a patent right when regulations are eased so as to allow different
durations of a patent for different sectors.

Ｉ Introduction
This study provides an analysis, conductedby applying a general equilibrium model, of how
the strength of intellectual property rights affects
the economic growth rate. Among previous
studies, those advocating theoretical models that
conclude the stronger the intellectual property
rights, the better are dominant. However, thesestudies cannot be evaluated as having given
sufficient consideration to the issues regarding
monopoly and externality, which should havebeen generally considered when developing atheoretical model that takes account of thestrength of intellectual property rights.
Externality is one of the major reasons why
intellectual property rights are necessary.
Supposing that no rights are granted for R&D
achievements, those who have successfully
developed new technologies by spending an
enormous amount of money would face the freeriding problem—a third party who has made nocontribution would imitate such newly developed
technologies. If firms set their R&D level on the
expectation that their achievements would
possibly be exploited by free riders, theequilibrium level would be lower than a sociallydesirable level. As a means to minimize losses in(*)

social welfare due to free riding, it is necessary to
grant some monopoly rights to those who havecontributed to technology development.
On the other hand, monopoly is not afavorable state in the context of economics. The
monopoly suppliers, who have price-controlling
power, would be motivated to hold supply below asocially desirable level to manipulate the priceupward, thereby maximizing their profit. Rulesfor intellectual property rights must be madewhile giving consideration to the trade-off
between the adverse effects of free riding andthose of monopoly, and an economic model that is
to give a theoretical basis for such rules must also
be created in the same line.
Intuitively, it could be said that if intellectual
property rights are too strong, the adverse effects
of monopoly would be too serious, whereas if
intellectual property rights are too weak, theywould give no incentive to carry out R&D;
therefore, a socially desirable level of thestrength of intellectual property rights would be
between these levels. However, most of theexisting theoretical models eventually support,
although partially, the argument that the stronger
the intellectual property rights, the better. Thismay be because factors such as the extent of freeriding and the adverse effects of monopoly areThis is an English translation of the summary of the report published under the Industrial Property Research
Promotion Project FY2009 entrusted by the Japan Patent Office. IIP is entirely responsible for any errors in
expression or description of the translation. When any ambiguity is found in the English translation, the original
Japanese text shall be prevailing.
● 1 ●IIP Bulletin 2010

given only as exogenous parameters. From such
viewpoint, this study develops and analyzes amodel, within a general equilibrium framework,
which considers an endogenous R&D investment
behavior related to intellectual property rights(more specifically, patent rights).
As mentioned above, undersupply is anadverse effect of monopoly, and the granting ofpatent rights may have caused another adverse
effect of monopoly. In the fields where patentrights have already been granted to certain firms,
other firms must carry out R&D in a manner thatthey would not infringe such existing patentrights. As a result, even when the same volume of
R&D investment is made, the chance of
successful development of new technologies
would be smaller in those fields, compared withthe fields where there are no such existing rights.
Considering that technological innovation is oneof the key factors for economic growth, excessive
protection of patent rights might generate waste
in investment and ultimately bring about a social
loss. This element could be largely controlled bymeans of policy, that is, how to deal with patentapplications for new technologies which cannot be
regarded as being effective in improving
productivity but involve inventive steps to somedegree. This study explicitly adopts this element
as one of the policy variables in the model
analysis.
Next, in Section II, the report of this study
briefly reviews the empirical and theoreticalresults obtained by previous studies, and thendiscusses the points that have not been
sufficiently probed, especially in theoreticalstudies. Section III formulates a model and makesa brief optimization calculation. Section IV
surveys the results of numerical calculations, andsees how policy variables affect the economic
growth rate. Section V states the conclusion of
the study and issues for future study.

growth models, there are a number of theoreticalmodels which investigate the relationshipbetween intellectual property rights andeconomic growth. These models, however,involve many problems yet to be solved, such asthat their conclusion is incompatible with theresults obtained in empirical studies, or that they
completely exclude factors that should be taken
into consideration in an empirical context orinclude those factors only in a reduced form.
In previous theoretical studies, the "strengthof intellectual property rights" is primarily
understood in terms of "infringement of rights,"
and at the same time it is also interpreted interms of the "duration of patent rights," as in thecase of empirical studies. Intuitively, there may
be a significant difference between the duration ofa patent right and infringement as to how theeconomy is affected when these factors arechanged. To the knowledge of the author, there isno general equilibrium model that explicitly takes
into account the influence of each factor. Based on
the previous studies, this study develops andanalyzes a dynamic general equilibrium modelthat is an extended version of the model
advocated by Horii and Iwaisako (2007)(*1).

Ⅲ ModelThis section shows the formulation of amodel. It sets up a general equilibrium frameworkin which agents, in each period, engage in work ofsome kind at firms, earn income according to theresults of their work, and use such income for
their consumption, and defines the growth rate of
consumption per period as an economic growthrate, which can be regarded as an indicator ofsocial welfare. One of the major objectives of thisstudy is to figure out the level of policy variables
that maximizes the economic growth rate in themodel.

Ⅱ Relationship with Previous Studies

1

The adverse effects of monopoly havealready been suggested in empirical studies. It isa generally supported view that there is an
optimal interior point for the "strength ofintellectual property rights" that indicates, forinstance, the length of the duration of a patentright, where those rights are not too strong or too
weak.
On the other hand, as extended endogenous

Let us suppose a closed economy consistingof a finite number of homogeneous agents wholive for an infinite period of time. First, the utility
to be gained by agents (as households) fromconsumption is defined. The term "utility" in thiscontext can basically be construed to be asynonym for the "level of satisfaction." A utility
function has the following characteristics: (1) the
degree of satisfaction increases as the volume ofHouseholds and production technology(*1) Horii, R., and Iwaisako, T. (2007): "Economic Growth with Imperfect Protection of Intellectual Property Rights."
Journal of Economics 90: 45-85.
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consumption increases; however, the increased
utility to be gained from each additional unit ofconsumption is larger in the case where thevolume of initial consumption is relatively small,than in the case where the volume of initialconsumption is relatively large; (2) supposing afixed number of units of consumption, present
consumption gives more satisfaction than future
consumption, provided that other conditions are
the same.
In order to consume something, we have tosecure income in some way and purchase the final
goods. We can obtain money by engaging in work(in a broad sense). Supposing that agents are
given one unit of labor in each period, if one
period is one day, one unit would be 24 hours or 8hours, and if one period is one year, one unit
would be 365 days or about 280 days.
As defined in detail in the next subsection,
agents decide whether they use their units oflabor by engaging in work as workers or engaging
in R&D as researchers in appropriate sectors of
their choosing, and earn income in the form ofwages and the like, according to their work
performance.
Final goods are produced by inputting an
infinite number of intermediate goods. Those
sectors that produce intermediate goods arelabeled as points on an interval with a length of 1.
Intermediate goods produced in each sector
potentially have different grades of quality.
Although immediate goods produced in the same
sector can be used for the production of final
goods in the same manner irrespective of theirgrades of quality, the degree of their contribution
to the volume of final goods produced depends ontheir grades of quality. Needless to say, the higher
the grade of quality, the larger the volume of
production. The degree of quality improvement
achieved by one unit of technological innovation(defined later) differs among sectors, which canbe divided into two categories, i.e. high-growth
sectors and low-growth sectors. The difference
exists in respect to the degree of increase inproductivity through quality improvement to be
derived from each R&D success. Such increase inproductivity is large in high-growth sectors,
whereas it is not so large in low-growth sectors.
In principle, every firm can produce intermediate
goods of any grade of quality within the sector
that it belongs to, but when the volume ofintermediate goods to be input is the same, thoseof a higher quality would have a greater influenceon the volume of final goods to be produced. All
sectors are homogenous. That is, if the same

quality and same volume of intermediate goods
are produced and input, they would have the same
influence on final goods. If the quality is also
taken into account, it is more desirable that thevolume of input intermediate goods be even,compared with the case where there is disparity.
For instance, the volume of final goods to be
produced would be larger when a medium quality
and a moderate volume of intermediate goods areproduced and input in all sectors, than when ahigh quality and a large volume of intermediate
goods are produced and input in half of thesectors and a low quality and a small volume ofintermediate goods are produced and input in theremaining sectors.
Given that the technology for producing final
goods is supplied competitively, in each period,
the firm producing final goods decides its demanddepending on the price of the intermediate goodsof the respective grades of quality that are offeredby firms in each sector, while providing
households with final goods at a price that it sets
so that it would gain no profit as a result of its
profit-maximizing behavior.
One unit of labor is required to produce one
unit of intermediate goods of any grade of quality
in any sector. Therefore, in the case of productionof intermediate goods in the same sector, only thehighest quality of intermediate goods in that
sector would be produced.
In each period, each sector can be either
competitive or monopolistic. A competitive sector
is a sector where no firm holds a patent right
related to the technology for producing thehighest quality of goods and all firms can produce
and supply the highest quality of goods under thesame conditions. A monopoly sector is a sector
where one particular firm owns the technology
for producing the highest quality of goods andother firms can supply only the second-best
goods.
Since price competition occurs for thetechnology used to produce final goods, in acompetitive sector, the price of goods would belowered to a level where firms gain no profit.
On the other hand, price competition israther moderate in a monopoly sector. The
monopoly firm, which has an advantage withrespect to quality, sets the price of its goods at alevel that is slightly higher than the wage level,
so that the firm can gain some profit. This does
not mean that there is no ceiling on the price thatthe monopoly firm can choose. If the firm offersintermediate goods at too high a price, this would
give an incentive to other firms in the same

● 3 ●IIP Bulletin 2010sector to supply a lower quality of intermediate
goods at a lower price. To avoid such a situation,
the monopoly firm would set its monopoly selling
price at a level where it could gain the sameamount of profit irrespective of whether or notother firms supply the second-best goods at a
price where they would gain no profit. As a result,the volume of production would be smaller thanthat in a competitive sector.
Let us assume that all firms can produce thesecond-best goods. This assumption is a sufficientcondition for the monopoly firm having no
incentive to make R&D investment. This is called
the Arrow effect, which means that the person
who gains the monopoly profit would be lessactive in carrying out R&D. Since the Arroweffect is observed in actual economic activities, it
is reasonable to use this effect as the condition
for making an assumption.
2

R&D

Agents engage in work while choosing, ineach period, to be an unskilled worker, researcher
in a competitive sector, or a researcher in amonopoly sector. When they choose to be an
unskilled worker, they engage in work for a
uniform wage that is to be determined
endogenously. When they choose to be a
researcher, they acquire stocks of the firms in the
sector that they choose, and make R&D
investment. They would succeed in developing
new technology according to the probability ofsuccessful R&D that is determined depending on
their investment level. A patent is applied for
immediately after a new technology is thus
developed successfully, and among thoseresearchers who have achieved success in R&D,
only one researcher will be exclusively entitled at
an equal probability, in the next period andthereafter, to any and all benefits that may arise
from a patent right in the future. Irrespective ofwhether their R&D has been successful or not, if
they choose to be an unskilled worker or a
researcher in another sector in the next period,
they sell off their stocks of that sector to which
they have belonged. Assuming that the stock
market is complete and efficient, the actual stock
price would remain the same for all periods andall firms.
Individual researchers determine how much
R&D investment they make in each period, froma shortsighted viewpoint as explained below.
Every researcher accurately understands his/her
own function of developing a new technology, but

he/she does not know such function of others, andtherefore he/she has no knowledge of how much
R&D investment others will make in the current
period and thereafter and at what probability
others will be successful in developing newtechnologies.
When making conjectures, each researcher
refers to the status as to how others in his/her
sector have obtained patent rights, as observed in
the past. More specifically, by observing the mostrecent average rate of obtaining patent rights(achieving R&D success) in each sector, eachresearcher determines that there is a possibility
that other researchers in his/her sector may
obtain patent rights at a probability equivalent to
the relative rate in the sectors where thesituation is the same as in his/her sector. Basedon his/her conjectures, the researcher calculates
at what probability his/her investment will lead tothe successful development of a new technology
and how much investment he/she should make toachieve this, as well as at what probability he/shewill not be able to enjoy the benefits of a patentright because of others' success in developing thesame technology, according to the conjectureed
number of other researchers and the R&D
investment level in the sector where his/her firm
belongs. Then, the researcher determines his/her
optimal investment level, while taking into
account the actions that others are apt to takeunder the current circumstances.
(1) Competitive sector
Agents, who have chosen to be a researcher
in a competitive sector, determine their own R&D
investment level. When their investment is at thelevel of zero, they are never successful intechnology development, and as they raise theirinvestment level to infinity, their probability ofsuccess increases accordingly. Disutility becomeslarge as their investment level increases because
they have to input their money and laboraccording to the investment level. Furthermore,
the higher the investment level, the larger theincrease in disutility derived from one additional
unit of investment becomes.
Let us assume that researchers do not
engage in joint research with others. Individual
researchers' success or failure depends on theirefforts independently. Every researcher, bychoosing an appropriate investment level,maximizes the difference between the expectedvalue of profit that he/she will gain from R&D
according to his/her investment level, anddisutility that is derived from such investment.

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(2) Monopoly sector
The factors necessary for the analysis of amonopoly sector are defined in the same manneras those for a competitive sector described in thepreceding subsection, with two exceptions: (1) inthe monopoly sector, there already exists amonopolist who has no incentive to carry out
R&D due to the aforementioned Arrow effect; (2)researchers other than the monopolist have asmaller chance of developing new technologies.
When a researcher other than the existing
monopolist achieves success in R&D, this makes
it impossible for the monopolist to maintain themonopoly profit. This is called leapfrogging. The
goal of R&D in a monopoly sector is to become
the new monopolist and gain the monopoly profit
in the next period and thereafter.
It should be noted that the ease ofleapfrogging can be interpreted as a policy
variable. In cases where the technology for
producing the highest quality of goods alreadymonopolizes the market, if a firm which has noright to that technology has developed a newtechnology through a research process that is far
from efficient, there is a considerable range ofpolicy options, between acknowledging such later
developed technology as a new production
technology, or including such new technology inthe scope of the patent (the technical scope of thepatented technology) so that an injunction may be
issued against the sale of goods produced byapplying said new technology. Leapfrogging would
be easy if the policy is close to the former option,
and would be difficult if the policy is close to thelatter option. It is not easy to find an answer
intuitively for the question as to which is
better—protecting the existing highest quality oftechnology that has already been developed, or
facilitating such a new technology developed byleapfrogging to be acknowledged. In the next
section, numerical calculations are made bysetting different levels of ease of leapfrogging, so
as to find out a level which maximizes the
economic growth rate.
3

Labor market equilibrium

The number of researchers in a sector
depends on free entry to the sector in therelevant period. In general, as the number of
researchers in the sector increases, it becomes
more probable that one researcher, even when
he/sheachieves
success
intechnology
development, is unable to obtain a patent rightbecause other researchers also achieve success.

This not only lowers the R&D investment level inthe sectors where there are many researchers,
but also encourages researchers in those sectors
to move to other sectors.
Intuitively, if working as an unskilled worker
is not appealing due to a low wage, then all agentswill wish to become researchers, in which case anecessary amount of labor for the production ofintermediate goods cannot be secured. Therefore,
firms need to raise the wage level so that theirproduction activities in the current period will no
be impeded. However, when wages are high, an
opposite force occurs, acting to lower the wage
level. As a result, at an equilibrium point, allagents could gain the same amount of expected
profit, irrespective of whether they choose towork as an unskilled worker or as a researcher.
4

In the preceding subsections, various factors
involved in the equilibrium of an economy perperiod are defined. This subsection considers
dynamics in which an economy per period isrepeated, and defines the transition of such
dynamics that start from a given initial state.
A sector that is competitive in a certain
period can change into a monopoly sector in thenext period if a patent right is granted to one
researcher in that sector. If no researcher issuccessful in R&D, the sector remains
competitive.
In a monopoly sector, monopoly by theexisting monopolist comes to an end due toleapfrogging or imitation. As defined above,
leapfrogging occurs when any other researcher
has achieved success in R&D. Imitation meansthat monopoly comes to an end upon the expiry ofthe duration of the patent right or infringement. It
is relatively easy for the policy authorities tocontrol the expiry of the duration of the patentright. Although the duration of a patent right isuniformly set as 20 years under existing law, thereport of this study assumes that different
durations can be set for different sectors, andanalyzes the influence on the economic growthrate in cases where longer or shorter durations
are set depending on sectors.
On the other hand, it is not easy for thepolicy authorities to control infringement. In
particular, if the authorities try to reduce
imitation to almost zero, they would have to set a
sufficiently long duration for a patent right, andcreate conditions where imitation could rarely
occur. For instance, in order to prevent the● 5 ●IIP Bulletin 2010

Evolution of economy

leakage of information relating to the productionof the highest quality of goods, the authorities
would have no choice but to impose constraints
on free economic activities in some ways, such as
by limiting the items of personal belongings thatworkers may carry with them when entering thefactory, or setting rules that restrict workers fromtaking data from computers. In the report of thisstudy, such constraints are represented by theassumption that the degree of quality
improvement achieved by one unit oftechnological innovation, as defined in the
beginning of the section explaining the model
setting, depends on the probability of imitation in
the sector. In order words, it is defined that
constraints would be imposed when theprobability of imitation is extremely small, andthis results in a lower degree of quality
improvement.
When imitation occurs in a monopoly sector,
the sector changes into a competitive sector in
the next period, whereas when leapfrogging andimitation occur simultaneously in that sector, it isassumed that imitation precedes leapfrogging. In
other words, imitation deprives the existing
monopoly firm of its rights, and another firm thathas achieved success in R&D becomes a newmonopoly firm and acquires monopoly profit in
the next period and thereafter.
Based on the formulation shown above, it ispossible to analyze the economic growth rate in a
steady state after an adequate period of time has
passed. In mathematical terms, this can result ina question to be answered by solving anautonomous
difference
equationthatisindependent from a time label.
The next section looks at the results ofdetailed numerical calculations.

Ⅳ Results of Numerical Calculations
This section looks at how policy variables
and other parameters affect the results ofnumerical calculations.
First, let us look at an optimal policy and its
results, in the case that a uniform duration of apatent right applies. It is optimal to facilitate
leapfrogging to the greatest extent possible. To be
more specific, it is desirable that the policy
authorities grant a patent right in a monopoly
sector, to the greatest possible extent, even for a
new technology which can be recognized as
involving inventive steps to some degree but has
actually been developed through a research
process that is far from efficient. This nature isestablished irrespective of the level of growthpotential of sectors. Intuitively, it can be
explained that the positive effect of the
facilitation of leapfrogging—that it will promote
R&D in a monopoly sector and improve thequality of intermediate goods and thereby
increase the supply of final goods—will
significantly exceeds its negative effect of
reducing the incentive for R&D by reducing the
expected value of future profit after obtaining apatent right.
The density of population of researchers ishigher in a competitive sector than in a monopoly
sector, and it is also higher in a high-growth
sector than in a low-growth sector. In a sector
which is expected to bring about high-level R&D
achievements and which therefore attracts anumber of researchers, it is more probable thatseveral researchers achieve success in R&D, but
a patent right is granted to only one of them,while others cannot enjoy the benefit of theirsuccess. Consequently, once the number of
researchers in each sector is fixed, the degree of
attractiveness of the sector will be the same forall sectors when viewed from the standpoint ofresearchers.
This has an interesting influence on thevolume of R&D investment. Irrespective ofwhether or not there are any constraints on the
duration of a patent right, or whether the sector
is competitive or monopolistic, the volume of
R&D investment per researcher in a high-growth
sector is on a par with that in a low-growth sector.
In other words, the difference between sectors interms of the level of growth potential iscompletely cancelled out by the difference interms of the degree of researchers' entry into thesector (and the degree of their activity inresearch), and all sectors will be completely
homogenous at the stage when agents who havechosen to be a researcher decide to make R&D
investment.
The volume of R&D investment per
researcher is larger in a monopoly sector than in acompetitive sector. This may be because, in amonopoly sector, there are a smaller number ofcompeting researchers, and they are more active
in making investment as they have more chances
to obtain a patent right if they succeed, evenwhen their spending for R&D investment
becomes relatively large.
The graphs below show the economic growthrate in a steady state, with the probability ofimitation set at various levels.

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Next, let us assume an optimal policy in thecase that there are no constraints on the durationof a patent right and that two types of durations
can be set for different sectors. In the report,
negative effects derived from removing
constraints with respect to the duration of apatent right, such as social costs arising from theincreased complexity of patent examination, arecompletely excluded from consideration. For thisreason, it is trivial, without the need to make aspecific calculation, that it is more beneficial if
there are no constraints. However, when it comesto making a policy change, it is not trivial which
policy should be changed and how it should bechanged in order to realize an optimal policy. In
this respect, an inquiry into the following resultsof numerical calculations may provide usefulimplications.
Here, the optimal policy is realized when b
is set at the maximum.
Under the optimal policy, the duration of apatent right is shorter in a high-growth sector
than in a low-growth sector. Let us find out why,by comparing the results of two numericalcalculations. In a high-growth sector, the durationof a patent right is shorter when there areconstraints than when there are no constraints,
the value that is expected from the granting of apatent right is lower, and the number of
researchers acting in the sector is smaller. In a
low-growth sector, said duration is longer, saidvalue is higher, and said number of researchers islarger. To put it the other way round, whencomparing the two sectors in the same period, it
can be said that the high-growth sector offers
higher monopoly profit than the low-growth
sector, which means that the high-growth sector
already has a good grounding for active R&D
investment, and there is no need to give

Economic growth rate

Economic growth rate

Probability of imitationconsideration from the policy perspective, such as
setting a longer duration of a patent right. Of
course, it can be argued that economic growthcomes from technological innovation, and in order
to effectively promote technological innovation,
more incentives should be given to researchers toenter the high-growth sector. However, it is also
true that if too many researchers come to one
sector, it would happen very frequently that a
number of innovative technologies that are
similar to one another would be developed,
although they would not additionally increase
productivity, thereby causing a loss. The resultsof the numerical calculations suggest that suchloss exceeds the degree of the aforementioned
positive effect.
When the probability of imitation in either of
the two sectors is fixed at an optimal level, whilesetting the probability in the other sector atvarious levels, the economic growth rate in a
steady state is as indicated in the graphs below.

Probability of imitation
On the graph above, the probability ofimitation in the low-growth sector is fixed at a
certain level, the probability of imitation in thehigh-growth sector is on the horizontal axis, andthe economic growth rate is on the vertical axis.
This graph has a gentle curve compared with thegraph subject to constraints, probably because on
this graph, the probability of imitation in the
low-growth sector is fixed and the policy change
directly affects the high-growth sector alone.
On the contrary, in the graph shown below,
the probability of imitation in the high-growth
sector is fixed at a certain level, the probability ofimitation in the low-growth sector is on thehorizontal axis, and the economic growth rate ison the vertical axis. Its curve seems to suddenly
become sharp around where the probability ofimitation in the low-growth sector surpasses thatin the high-growth sector.

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Economic growth rateeconomic growth rate in a steady state is at a
medium level. The report also analyzed an
optimal policy in the case where the duration of apatent right is not necessarily required to be set
at 20 years, which implies that it is desirable thatthe duration of a patent right be shorter in sectors
with higher-growth potential.

Probability of imitation
An appropriate interpretation of this curve
may be that the low-growth sector becomes too
unattractive to researchers. The low-growth
sector is basically inferior in attracting
researchers who wish to engage in R&D due tothe low level of productivity improvement, and in
addition, if the probability of imitation is set at ahigh level from a policy perspective, researchers
would not be attracted to the low-growth sector
and the R&D level in this sector would become
too low.
The three graphs shown above may give us
the following policy implications. Supposing thatthe mutual influence among the parameters usedin the report take on significance in the real
economy, in the case where the duration of apatent right under existing law, 20 years for any
patent, is an optimal level subject to constraints,
it is desirable that after such constraints are
removed, the duration of a patent right be madeshorter in the sectors with higher growthpotential. Careful consideration is required so as
not to mistakenly apply a shorter duration of apatent right to low-growth sectors, which would
have a considerable adverse effect on the total
economic growth rate.

Ⅴ In Closing
The report addressed the concept of"imitation," which has not been specifically taken
into account in previous studies, and formulated itin the form of general equilibrium dynamics, by
explicitly giving two interpretations: a "highlikelihood of patent infringement" and a"shortness of the duration of a patent right."
Through this approach, a conclusion that is
consistent with the results of empirical studies
has been obtained—the optimal degree ofprobability of imitation that can maximize the● 8 ●IIP Bulletin 2010