Patenting and Innovation
Technology Adoption
Trade Policy
Luther, Z. R. The gravity of patent protection: Policy, frictions, and technology diffusion. Open Access Link
Abstract: I document that foreign innovators are less likely to be approved patent protection (monopoly ownership) over their inventions relative to domestic innovators. I also show that innovators file 0.3-1.2% additional patent applications in a given market with every 1 percentage point increase in their likelihood of patent approval there. Quantifying a gravity model, I show that policies enforcing free trade are more effective in inducing welfare-improving gains to international technology transfer and innovation than policies addressing unequal patent protection. Standardizing patent protection increases the average fraction of technologies patented in foreign markets by upward of 4 percentage points, and increases the global rate of innovation by 12-22%. However, welfare gains are negligible, since the gains to firms from increased market access can be nearly offset by losses in households' purchasing power from consuming proprietary inventions. Alternatively, free trade increases the fraction of technologies patented abroad by upward of 9 percentage points, increases the global rate of innovation by 60%, and increases welfare by 5.3%. Under free trade, foreign firms benefit from larger profit margins for the few patents that do get approved; households' purchasing power increases, too, since consumers no longer have to pay additional import costs to access foreign technology.
Bond, Eric W., & Luther, Z. R. (2025). International patent families: when to apply. Review of International Economics, 33: 450-465. Open Access Link.
Abstract: We model the decision of an innovating firm on where and when to make cross-border patent applications given the rules of the Paris Convention and Patent Cooperation Treaty (PCT). We show that an innovating firm will have an incentive to apply at the beginning (end) of the Paris Convention application window when returns are front-loaded (back-loaded). The preliminary review provided by a PCT application expedites the review process in subsequent national applications, leading to the selection of firms with more productive innovations into the PCT route for cross-border applications. We also show that the PCT's preliminary application may be used to provide information on the patentability of an innovation. To provide empirical evidence on these predictions, we compare the patenting behavior of semiconductor applicants with those of pharmaceutical applicants, where the former has among the shortest times from innovation to market and the latter the longest. Consistent with the predictions of the model, we find that pharmaceutical applications are 15 percentage points likelier than semiconductor applications to be filed at the Paris deadline for national applications under the Paris convention. PCT applications for pharmaceuticals are 32 percentage points likelier to be filed at the Paris deadline. We also find that as many as 30% of PCT applications may result in information about patentability that makes subsequent applications unprofitable.
Luther, Z. R., Swinton, S. M., & Van Deynze, B. (2022). Potential Supply of Midwest Cropland For Conversion to In-Field Prairie Strips. Land Economics, 98(2): 274–291. Open Access Link.
Abstract: Prairie strips planted into crop fields offer multiple environmental benefits. This study estimates the willingness of U.S. farmers to convert 5% of their largest corn-soybean field to prairie strips in exchange for payment. Using stated preference results to estimate land supply, we find that 20% of farmers are willing to adopt prairie strips at payments equivalent to average Conservation Reserve Program rental rates, corresponding to potential conversion of 90,000 acres on 1.8 million acres of cropland. Farmers are likelier to adopt in smaller fields and when they perceive that prairie strips will benefit environmental quality or agricultural productivity.
Luther, Z. R., Swinton, S. M., & Van Deynze, B. (2020). What drives voluntary adoption of farming practices that can abate nutrient pollution?. Journal of Soil and Water Conservation, 75(5): 640-650. Open Access Link.
Abstract: Agricultural nutrient runoff and leaching into groundwater can impose societal costs that may be external to farmer decisions. Farmers can reduce the environmental impact of nutrient losses by adopting conservation and precision nutrient diagnostic and application practices. We examine the determinants of adoption decisions of such practices using mail survey data from a large, stratified sample of corn (Zea mays L.) and soybean (Glycine max [L.] Merr.) farmers in the US eastern Corn Belt. Via an ordered probit that captures both adoption and intent to adopt eight different practices, we evaluate a broad range of potential factors driving adoption of conservation and precision agriculture practices. We find that farmer objectives other than income, such as preferences for environmental amenities or social status, were important adoption drivers for conservation and precision technologies, respectively. Livestock farms had a distinct adoption profile, with greater likelihood to adopt cover cropping and less to adopt precision technologies. Farmers who participated in work- ing lands programs were more likely to adopt both cover cropping and precision soil testing technologies. Policies and messaging to encourage voluntary adoption of practices to reduce agricultural nutrient loss should account for farmer objectives, farming systems, and existing policy incentives.
Bond, E. W., & Luther, Z. R. International patent families: where to apply.
Abstract: We present a model to explain the decision of innovators on where to apply for patent protection. This model generates predictions concerning the size of patent families and the sorting of applicants between applications to the European Patent Office (EPO) and member country national offices. It also generates a gravity equation for cross border patenting. We use data from PATSTAT to test the predictions of the model. Using the number of applications outside the EPO membership as a proxy for innovation quality, we find strong support for the prediction of sorting of high-expected productivity applicants to the EPO. We also address the puzzle as to why a third of the applicants to member country markets also apply to the EPO. Finally, we find evidence for the role of both market size and the ability to imitate as determinants of where to apply for patents. Open Access Link
Luther, Z. R. (2024). National treatment or national barriers? Evidence from international patent families. Open Access Link
Abstract: Using data on 20 million patent applications filed across 88 countries between 1990-2016, I demonstrate that foreign innovators have worse outcomes in intellectual property rights than domestic innovators. Foreign-owned inventions are 8-24 percentage points less likely to be granted patent protection than domestic ones. Foreign patents that are approved take 7-72% longer to be granted, and foreign-born patent applications are cited by domestic patent examiners at a 27-62% lower rate than domestic applications. Disparities are lower when innovators file applications in markets that are closer in geographical proximity and when they file in markets with similar legal institutions as their own. Disparities are larger for patent offices in countries in the Global South. Gaps are largest after accounting for invention novelty, proximity, and other frictions possibly affecting an applicant's success when filing for protection abroad. I provide suggestive evidence that patent offices around the world may be discriminating against foreign innovators, in non-compliance with the World Trade Organization's "national treatment principle."
Luther, Z. R. National treatment and economic growth: a Schumpeterian perspecive.