ABSTRACT
This chapter analyses the theoretical and empirical work in the area of technological change and R&D, with an emphasis on trying to ascertain whether a relationship exists between market structure and technological advance. The United States patent system to determine its impact on the rate of technological advance. Many major technological changes begin with basic research, which is research aimed at gaining knowledge for its own sake. The relationship between firm size and technological advance and between market structure and innovation, theory can take us just so far, and it is necessary to examine the empirical evidence. Schumpeter's writings and theoretical work generated an extensive body of empirical work, most of which looked at two hypotheses. The first is inventive activity and the second is a positive relationship between inventive activity and market concentration. The chapter focuses on the economics of the patent system. Economic theory suggests, that patent protection may not increase the rate of technological advance.
