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R&D Productivity and Intellectual Property Rights Protection Regimes

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  • Joanna Poyago-Theotoky

    ()
    ( Rimini Centre for Economic Analysis (RCEA); University of Loughborough, Department of Economics)

  • Khemarat Talerngsri Teerasuwannajak

    ()
    ( Faculty of Economics, Chulalongkorn University)

Abstract

We study fi rms' preferences towards intellectual property rights (IPR) regimes in a North-South context, using a simple duopoly model where a 'North' and a 'South' firm compete in a third market. Unlike other contributions in this fi eld, we explicitly introduce the South's capability to undertake cost-reducing R&D, but maintain the South's inferiority in utilizing and managing its R&D. In contrast to traditional results, we show that the North may encourage lax IPR protection provided that its South rival's R&D productivity is sufficiently high, while the South may fi nd it in its best interest to strictly enforce IPR protection if its R&D productivity is low. In this sense, our results do not support the idea of universal or uniform IPR protection regime. In addition, we find that if fi rms are allowed to agree on any level of information exchange when IPR protection is strictly enforced, such an exchange can always be established as long as each fi rm is ensured that what it gets to utilize in return is sufficiently more than what it gives to its rival.

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Bibliographic Info

Paper provided by The Rimini Centre for Economic Analysis in its series Working Paper Series with number 43_09.

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Date of creation: Jan 2009
Date of revision: Jan 2009
Handle: RePEc:rim:rimwps:43_09

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Keywords: intellectual property rights (IPR); cost-reducing R&D; R&D productivity; information exchange;

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  1. Poyago-Theotoky, Joanna, 1996. "R&D Competition with Asymmetric Firms," Scottish Journal of Political Economy, Scottish Economic Society, vol. 43(3), pages 334-42, August.
  2. Kamien, Morton I & Muller, Eitan & Zang, Israel, 1992. "Research Joint Ventures and R&D Cartels," American Economic Review, American Economic Association, vol. 82(5), pages 1293-306, December.
  3. Grossman, Gene & Lai, Edwin, 2002. "International Protection of Intellectual Property," CEPR Discussion Papers 3118, C.E.P.R. Discussion Papers.
  4. Spence, Michael, 1984. "Cost Reduction, Competition, and Industry Performance," Econometrica, Econometric Society, vol. 52(1), pages 101-21, January.
  5. Diwan, Ishac & Rodrik, Dani, 1989. "Patents, appropriate technology, and North-South trade," Policy Research Working Paper Series 251, The World Bank.
  6. Sanjaya Lall and Manuel Albaladejo, . "Indicators of the Relative Importance of IPRs In Developing Countries," QEH Working Papers qehwps85, Queen Elizabeth House, University of Oxford.
  7. Nilssen, Tore & Pita Barros, Pedro Luis, 1998. "Industrial Policy and Firm Heterogeneity," CEPR Discussion Papers 1986, C.E.P.R. Discussion Papers.
  8. Deardorff, Alan V, 1992. "Welfare Effects of Global Patent Protection," Economica, London School of Economics and Political Science, vol. 59(233), pages 35-51, February.
  9. De Bondt, Raymond & Slaets, Patrick & Cassiman, Bruno, 1992. "The degree of spillovers and the number of rivals for maximum effective R &D," International Journal of Industrial Organization, Elsevier, vol. 10(1), pages 35-54, March.
  10. Zigic, Kresimir, 1998. "Intellectual property rights violations and spillovers in North-South trade," European Economic Review, Elsevier, vol. 42(9), pages 1779-1799, November.
  11. Kultti, Klaus & Takalo, Tuomas, 1998. "R&D spillovers and information exchange," Economics Letters, Elsevier, vol. 61(1), pages 121-123, October.
  12. Lai, Edwin L. -C. & Qiu, Larry D., 2003. "The North's intellectual property rights standard for the South?," Journal of International Economics, Elsevier, vol. 59(1), pages 183-209, January.
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