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Implications of Intellectual Property Rights for Dynamic Gains from Trade

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  • Michelle Connolly
  • Diego Valderrama

Abstract

A simple intellectual property rights (IPRs) framework is introduced into a dynamic quality ladder model of technological diffusion between innovating firms in one country and imitating firms in another country. The presence of technological spillovers and feedback effects between firms in the two countries demonstrates that, even when steady state growth increases, transition costs sometimes dominate steady state welfare gains. Most existing models of international IPRs find that high intellectual property enforcement in the imitating country leads to welfare gains in the innovating country at the expense of the imitating country. In contrast, we find IPR regimes that, even after accounting for transition costs, positively affect welfare in both countries. Preferred IPR regimes maintain competition from imitative activity but enforce some remuneration to innovators for the spillovers they generate. Well-designed IPR regimes imposed at the time of trade liberalization will be welfare enhancing for both regions relative to trade liberalization without IPR enforcement.

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Bibliographic Info

Article provided by American Economic Association in its journal American Economic Review.

Volume (Year): 95 (2005)
Issue (Month): 2 (May)
Pages: 318-322

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Handle: RePEc:aea:aecrev:v:95:y:2005:i:2:p:318-322

Note: DOI: 10.1257/000282805774670022
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  1. Elhanan Helpman, 1992. "Innovation, Imitation, and Intellectual Property Rights," NBER Working Papers 4081, National Bureau of Economic Research, Inc.
  2. Robert J. Barro & Xavier Sala-i-Martin, 1995. "Technological diffusion, convergence and growth," Economics Working Papers 116, Department of Economics and Business, Universitat Pompeu Fabra.
  3. Grossman, G.M. & Lai, E., 2001. "International Protection of intellectual Property," Papers 215, Princeton, Woodrow Wilson School - Public and International Affairs.
  4. Blair,Roger D. & Cotter,Thomas F., 2005. "Intellectual Property," Cambridge Books, Cambridge University Press, number 9780521540674.
  5. Michelle P. Connolly & Diego Valderrama, 2005. "North-South technological diffusion and dynamic gains from trade," Working Paper Series 2004-24, Federal Reserve Bank of San Francisco.
  6. Blair,Roger D. & Cotter,Thomas F., 2005. "Intellectual Property," Cambridge Books, Cambridge University Press, number 9780521833165.
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Cited by:
  1. Stryszowski, P.K., 2006. "Intellectual Property Rights, Globalization and Growth," Discussion Paper 2006-76, Tilburg University, Center for Economic Research.
  2. A. Naghavi & Y. Tsai, 2012. "Cross-border intellectual property rights: contract enforcement and absorptive capacity," Working Papers wp809, Dipartimento Scienze Economiche, Universita' di Bologna.
  3. Caregari, Davide, 2010. "Diritti di proprietà intellettuale: sviluppi recenti e prospettive di riforma
    [Intellectual property rights: recent developements and reform prospects]
    ," MPRA Paper 28132, University Library of Munich, Germany.
  4. Mondal, Debasis & Ranjan Gupta, Manash, 2009. "Endogenous imitation and endogenous growth in a North-South model: A theoretical analysis," Journal of Macroeconomics, Elsevier, vol. 31(4), pages 668-684, December.
  5. Fukui, E. Tani & Hammer, Alexander B. & Jones, Lin Z., 2013. "Are U.S. exports influenced by stronger IPR protection measures in recipient markets?," Business Horizons, Elsevier, vol. 56(2), pages 179-188.
  6. Hua Liang & Zongyi Zhang, 2012. "The effects of industry characteristics on the sources of technological product and process innovation," The Journal of Technology Transfer, Springer, vol. 37(6), pages 867-884, December.

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