This updated draft to the original working paper in 2003 develops a simple duopoly model in which investments in R&D and patents are inputs in the production of firm rents. Analysis of the model reveals a general necessary condition for the existence of a positive correlation between the firm’s R&D intensity and the number of patents it obtains.
Link
http://www.phil.frb.org/files/wps/2006/wp06-6.pdf