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Market structure, FDI, imitation and innovation: a model of North-South intellectual property rights conflict

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  • Ziyin Zhuang
  • Wei Zou
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    Abstract

    We develop an extended North-South model to analyse the US-China IPRs conflict and possible policies. In our model, innovation in the North (US), imitation in the South (China), and Foreign Direct Investment (FDI) are all endogenous. We predict that whether tighter IPRs benefit the US or China depends crucially on market structure. In an oligopoly market induced by vertical innovation, tighter IPRs hurt both economies; while, in a monopolistic competition market induced by horizontal innovation, tighter IPRs benefit both economies as long as the degree of IPRs is appropriately chosen. We prove the existence of an optimal degree of IPRs protection in China, which may differentiate it from that in the US.

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    Bibliographic Info

    Article provided by Taylor & Francis Journals in its journal Journal of Chinese Economic and Business Studies.

    Volume (Year): 8 (2010)
    Issue (Month): 3 ()
    Pages: 253-267

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    Handle: RePEc:taf:jocebs:v:8:y:2010:i:3:p:253-267

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    Keywords: Intellectual Property Rights; market structure; FDI; imitation; innovation;

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