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Optimum tariffs and patent length in a model of North–South technology transfer

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Author Info

  • Sharmila Vishwasrao

    () (Department of Economics, College of Business, Florida Atlantic University)

  • Srabana Gupta

    (The Penn State University, Erie)

  • Hassan Benchekroun

    () (Department of Economics, McGill University, Montreal, Canada)

Abstract

We study a developing country's choice of optimum tariffs and patent length in a theoretical model of trade and technology transfer. A Northern firm chooses whether to export or produce a new good in a Southern country. In the absence of patent protection, a high tariff is required to induce FDI. This reduces Southern welfare when the good is imported. The Southern government can combine a positive patent length with tariffs to reduce this loss and induce FDI. Thus Southern countries may have an incentive to protect patents, although never to the same extent as Northern countries.

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Bibliographic Info

Paper provided by Department of Economics, College of Business, Florida Atlantic University in its series Working Papers with number 04022.

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Length: 19 pages
Date of creation: Oct 2004
Date of revision: May 2005
Publication status: Forthcoming in International Review of Economics & Finance
Handle: RePEc:fal:wpaper:04022

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Keywords: Trade policy; Intellectual property rights; Foreign direct investment;

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References

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  1. Lee, Jeong-Yeon & Mansfield, Edwin, 1996. "Intellectual Property Protection and U.S. Foreign Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 181-86, May.
  2. Ethier, W.J. & Markusen, J.R., 1993. "Multinational Firms, Technology Diffusion and Trade," ISER Discussion Paper 0303, Institute of Social and Economic Research, Osaka University.
  3. Leahy, Dermot & Neary, J Peter, 1998. "Strategic Trade and Industrial Policy Towards Dynamic Oligopolies," CEPR Discussion Papers 1968, C.E.P.R. Discussion Papers.
  4. Jean O. Lanjouw, 1998. "The Introduction of Pharmaceutical Product Patents in India: "Heartless Exploitation of the Poor and Suffering"?," NBER Working Papers 6366, National Bureau of Economic Research, Inc.
  5. Zigic, Kresimir, 2000. "Strategic trade policy, intellectual property rights protection, and North-South trade," Journal of Development Economics, Elsevier, vol. 61(1), pages 27-60, February.
  6. Miyagiwa, K. & Ohno, Y., 1993. "Closing the Technology Gap Under Protection," Working Papers 93-09, University of Washington, Department of Economics.
  7. Scherer, F M, 1972. "Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review, American Economic Association, vol. 62(3), pages 422-27, June.
  8. Glass, Amy Jocelyn & Saggi, Kamal, 1999. "Multinational firms and technology transfer," Policy Research Working Paper Series 2067, The World Bank.
  9. Svedberg, Peter, 1979. "Optimal Tariff Policy on Imports from Multinationals," The Economic Record, The Economic Society of Australia, vol. 55(148), pages 64-67, March.
  10. James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-89, August.
  11. Magnus Blomstrom & Jian-Ye Wang, 1992. "Foreign Investment and Technology Transfer: A Simple Model," NBER Working Papers 2958, National Bureau of Economic Research, Inc.
  12. Michael Ferrantino, 1993. "The effect of intellectual property rights on international trade and investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 129(2), pages 300-331, June.
  13. Vishwasrao, Sharmila, 1994. "Intellectual property rights and the mode of technology transfer," Journal of Development Economics, Elsevier, vol. 44(2), pages 381-402, August.
  14. M. Scott Taylor, 1993. "TRIPS, Trade, and Technology Transfer," Canadian Journal of Economics, Canadian Economics Association, vol. 26(3), pages 625-37, August.
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Cited by:
  1. Yang, Quanfa & Cheng, Liyun, 2008. "Import tariff, intellectual property right protection and foreign merger," Economic Modelling, Elsevier, vol. 25(6), pages 1225-1231, November.
  2. Amitrajeet A. Batabyal & Hamid Beladi, . "Trade, the Damage from Alien Species, and the Effects of Protectionism Under Alternate Market Structures," Working Papers 0043, College of Business, University of Texas at San Antonio.
  3. An-Sing Chen & Hui-Jyuan Gao & Mark Leung, . "Is Trading Imbalance a Better Explanatory Factor in the Volatility Process? Intraday and Daily Evidence from E-mini S&P 500 Index Futures and Information-Based Hypotheses," Working Papers 0039, College of Business, University of Texas at San Antonio.

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