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Endogenous Enforcement of Intellectual Property, North-South Trade, and Growth

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  • Andreas Schäfer

    () (University of Leipzig, Germany)

  • Maik T. Schneider

    () (ETH Zurich, Switzerland)

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    Abstract

    While most countries have harmonized intellectual property rights (IPR) legislation, the dispute about the optimal level of IPR-enforcement remains. This paper develops an endogenous growth framework with two open economies satisfying the classical North-South assumptions to study (a) IPR-enforcement in a decentralized game and (b) the desired globally-harmonized IPR-enforcement of the two regions. The results are compared to the constrained-efficient enforcement level. Our main insights are: The regions’ desired harmonized enforcement levels are higher than their equilibrium choices, however, the gap between the two shrinks with relative market size. While growth rates substiantially increase when IPR-enforcement is harmonized at the North’s desired level, our numerical simulation suggests that the South may also benefit in terms of long-run welfare.

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    File URL: http://www.cer.ethz.ch/research/WP-11-150.pdf
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    Bibliographic Info

    Paper provided by CER-ETH - Center of Economic Research (CER-ETH) at ETH Zurich in its series CER-ETH Economics working paper series with number 11/150.

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    Length: 52 pages
    Date of creation: Aug 2011
    Date of revision:
    Handle: RePEc:eth:wpswif:11-150

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    Keywords: Endogenous Growth; Intellectual Property Rights; Trade; Dynamic Game;

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    1. McCalman, Phillip, 2001. "Reaping what you sow: an empirical analysis of international patent harmonization," Journal of International Economics, Elsevier, vol. 55(1), pages 161-186, October.
    2. Dinopoulos, Elias & Segerstrom, Paul, 2006. "North-South Trade and Economic Growth," CEPR Discussion Papers 5887, C.E.P.R. Discussion Papers.
    3. Eicher, Theo & García-Peñalosa, Cecilia, 2008. "Endogenous strength of intellectual property rights: Implications for economic development and growth," European Economic Review, Elsevier, vol. 52(2), pages 237-258, February.
    4. Phillip McCalman, 2001. "National patents, innovation and international agreements," Journal of International Trade & Economic Development, Taylor and Francis Journals, vol. 11(1), pages 1-14.
    5. Hans Gersbach, 2004. "Competition of Politicians for Incentive Contracts and Elections," Public Choice, Springer, vol. 121(1), pages 157-177, October.
    6. Futagami, Koichi & Iwaisako, Tatsuro, 2007. "Dynamic analysis of patent policy in an endogenous growth model," Journal of Economic Theory, Elsevier, vol. 132(1), pages 306-334, January.
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