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Would global patent protection be too weak without international coordination?

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  • Edwin L.-C. Lai

    (Research Department, Federal Reserve Bank of Dallas, USA)

Abstract

I extend the Grossman and Lai (2004) model to answer the question, "Would global patent protection be too weak without international coordination?" by introducing firmbiased government preferences and trade barriers in the model. I make use of the estimates of the firm-bias parameter from the political economy literature to proxy for the degree of governments' firm-bias. Then I calculate the range of trade barriers that is sufficient to give rise to under-protection of patents in the global system without international policy coordination in IPR protection. I make the judgement that the true trade barrier between countries very likely falls within this range of under-protection. Therefore, I conclude that there was probably under-protection of patents without international policy coordination in IPR protection. It means that the free-rider problem with a large number of independent players overrides the effects of firm-bias and trade barriers, giving rise to too low a rate of innovation in the world. Allowing for the possibility that countries discriminate against foreign firms in Nash equilibrium does not change this conclusion. The problem can possibly be corrected by international coordination in intellectual property rights (IPR) protection.

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File URL: http://www.rieb.kobe-u.ac.jp/academic/ra/dp/English/dp226.pdf
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Bibliographic Info

Paper provided by Research Institute for Economics & Business Administration, Kobe University in its series Discussion Paper Series with number 226.

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Length: 40 pages
Date of creation: Nov 2005
Date of revision: Aug 2008
Handle: RePEc:kob:dpaper:226

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Keywords: Intellectual property rights; TRIPS; Innovation;

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Cited by:
  1. Ming Liu & Sumner La Croix, 2014. "A Cross-Country Index of Intellectual Property Rights in Pharmaceutical Innovations," Working Papers 201408, University of Hawaii at Manoa, Department of Economics.

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