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A Welfare Analysis of Global Patent Protection in a Model with Endogenous Innovation and Foreign Direct Investment

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Author Info
Hitoshi Tanaka () (Faculty of Economics, Hokkai Gaku-en University)
Tatsuro Iwaisako () (Graduate School of Economics, Osaka University)
Koichi Futagami () (Graduate School of Economics, Osaka University)

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Abstract

This paper constructs a North-South quality ladder model in which foreign direct investment (FDI) is determined by the endogenous location choice of firms and examines analytically how strengthening patent protection in the South affects welfare in the South. Strengthening patent protection increases the Southfs welfare by enhancing innovation and FDI, but also allows the firms with patents to charge higher prices for their goods, which decreases welfare. However, the model shows that the former positive welfare effect overcomes the latter negative one, and introducing the strictest form of patent protection in the South, that is, harmonizing patent protection in the South with that in the North, may maximize welfare in the South as well as in the North.

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File URL: http://www2.econ.osaka-u.ac.jp/library/global/dp/0924.pdf
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Publisher Info
Paper provided by Osaka University, Graduate School of Economics and Osaka School of International Public Policy (OSIPP) in its series Discussion Papers in Economics and Business with number 09-24.

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Length: 35 pages
Date of creation: Aug 2009
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Handle: RePEc:osk:wpaper:0924

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Web page: http://www.econ.osaka-u.ac.jp/
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Related research
Keywords: foreign direct investment; innovation; intellectual property rights protection; welfare analysis;

Find related papers by JEL classification:
F43 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Economic Growth of Open Economies
O33 - Economic Development, Technological Change, and Growth - - Technological Change - - - Technological Change: Choices and Consequences; Diffusion Processes
O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights
O40 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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  1. Richard Gilbert & Carl Shapiro, 1990. "Optimal Patent Length and Breadth," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 106-112, Spring. [Downloadable!] (restricted)
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  2. Judd, Kenneth L, 1985. "On the Performance of Patents," Econometrica, Econometric Society, vol. 53(3), pages 567-85, May. [Downloadable!] (restricted)
  3. 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. [Downloadable!] (restricted)
  4. Grinols, Earl & Lin, Hwan C., 2006. "Global patent protection: channels of north and south welfare gain," Journal of Economic Dynamics and Control, Elsevier, vol. 30(2), pages 205-227, February. [Downloadable!] (restricted)
  5. Ai-Ting Goh & Jacques Olivier, 2002. "Optimal Patent Protection in a Two-Sector Economy," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 43(4), pages 1191-1214, November. [Downloadable!] (restricted)
  6. McCalman, P., 1999. "Reaping What You Sow: An Empirical Analysis of International Patent Harmonization," Papers 374, Australian National University - Department of Economics.
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This page was last updated on 2009-11-26.

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