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Probabilistic Patents, Alternative Damage Rules, and Optimal Tariffs

Author

Listed:
  • Apurva Dey
  • Arun Kumar Kaushik
  • Rupayan Pal

Abstract

This paper analyzes interdependences between optimal trade policy and preferred liability doctrine to assess infringement damages, when intellectual property rights are probabilistic, in a model of import competition between a foreign patentee and a domestic infringer. It shows two reversal results. First, a regime switch from protectionism to free trade reverses stakeholders' preferences over liability doctrines. Second, the optimal trade policy changes from an import tariff under the lost-profit rule to import subsidization under the unjust-enrichment rule, unless the patent is weak. It is found that free trade is not optimal, except for a few knife-edge cases.

Suggested Citation

  • Apurva Dey & Arun Kumar Kaushik & Rupayan Pal, 2020. "Probabilistic Patents, Alternative Damage Rules, and Optimal Tariffs," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 176(2), pages 276-311.
    • Handle: RePEc:mhr:jinste:urn:doi:10.1628/jite-2020-0001
    DOI: 10.1628/jite-2020-0001
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    Cited by:

    1. Ganguly, Madhuparna, 2021. "Stronger Patent Regime, Innovation and Scientist Mobility," MPRA Paper 107635, University Library of Munich, Germany.
    2. Madhuparna Ganguly, 2020. "Stricter patent regime, scientist mobility and innovation," Indira Gandhi Institute of Development Research, Mumbai Working Papers 2020-037, Indira Gandhi Institute of Development Research, Mumbai, India.

    More about this item

    Keywords

    probabilistic intellectual property rights; infringement; damage rules; import competition; trade policy;
    All these keywords.

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations

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