WORKING PAPER: Patent Boxes and the Success Rate of Applications

Published in CESifo Working Paper Series, 2020

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 success 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.

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OK Computer: the creation and integration of AI in Europe

Published in Cambridge Journal of Regions, Economy and Society, 2020

This article investigates the creation and integration of artificial intelligence (AI) patents in Europe. We create a panel of AI patents over time, mapping them into regions at the NUTS2 level. We then proceed by examining how AI is integrated into the knowledge space of each region. In particular, we find that those regions where AI is most embedded into the innovation landscape are also those where the number of AI patents is largest. This suggests that, to increase AI innovation, it may be necessary to integrate it with industrial development, a feature central to many recent AI-promoting policies.

Recommended citation: Bernardo S Buarque, Ronald B Davies, Ryan M Hynes, Dieter F Kogler, OK Computer: the creation and integration of AI in Europe, Cambridge Journal of Regions, Economy and Society, Volume 13, Issue 1, March 2020, Pages 175–192,