de Rassenfosse, G. & Jaffe, A., 2018. "Econometric evidence on the depreciation of innovations". European Economic Review 101, 625-642.

Abstract
This paper presents estimates of the depreciation rate of innovations using survey data on revenues associated with Australian patents. Its novelty is twofold. First, it relies on direct observation of the revenue streams of inventions. This is in sharp contrast with previous studies, which all rely on models based on indirect observation and require strong identifying assumptions. Second, it presents estimates of the effect of patent protection on the depreciation rate. Results suggest that the depreciation rate is in the 2-7 per cent range. Inventions for which a patent is granted are associated with a 1-2 percentage point reduction in the depreciation rate.

Keywords: Appropriability; Intangible asset; Obsolescence; Depreciation; Returns to R&D
JEL classification: M41; O32; O33; O34

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This article:

• Provides a discussion of the "depreciation puzzle" and reviews existing estimates;
• Uses Australian survey data on patents to estimate the depreciation rate of innovations;
• Shows that the depreciation rate of innovation is in the 2 to 7 per cent range;
• Finds that inventions for which a patent is granted are associated with a 1 to 2 percentage point reduction in the depreciation rate;
• Provides evidence that lapsed patents still generate economic benefits to their owners.

• Econometric Evidence on the R&D Depreciation Rate, NBER Working Paper 23072
• Survey-data estimates of the R&D depreciation rate, Technical report for the Australian Department of Industry, Innovation, Science, Research and Tertiary Education