Non-obviousness and Screening

Zonglai Kou, Patrick Rey, Tong Wang

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

The paper offers a novel justification for the non‐obviousness patentability requirement. An innovation involves two stages: research results in a technology blueprint, which development transforms into a profitable activity. An innovator, who is either efficient or inefficient, must rely on outside finance for the development. Only patented technologies are developed. Strengthening the non‐obviousness requirement alleviates adverse selection by discouraging inefficient innovators from doing research, but creates inefficiencies by excluding marginal innovations. We show that it is socially optimal to raise the non‐obviousness requirement so as to exclude bad innovators; we also provide several robustness checks and discuss the policy implications.
Original languageEnglish
Pages (from-to)700–732
JournalThe Journal of Industrial Economics
Issue number3
Publication statusPublished - Sept 2013


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