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A Note on Global Welfare in Pharmaceutical Patenting


  • F. M. Scherer


This paper revisits the question of whether global welfare is higher under a uniform world-wide system of pharmaceutical product patents or with international rules allowing low-income nations to free-ride on the discoveries of firms in rich nations. Key variables include the extent to which free-riding reduces the discovery of new drugs, the rent potential of rich as compared to poor nations, the ratio of the marginal utility of income in poor as compared to rich nations, and the competitive environment within which R&D decisions are made. Global welfare is found to be higher with free-riding across plausible discovery impairment and income utility combinations, especially when rent-seeking behaviour leads to an expansion of R&D outlays exhausting appropriable rents. Copyright 2004 Blackwell Publishing Ltd.

Suggested Citation

  • F. M. Scherer, 2004. "A Note on Global Welfare in Pharmaceutical Patenting," The World Economy, Wiley Blackwell, vol. 27(7), pages 1127-1142, July.
  • Handle: RePEc:bla:worlde:v:27:y:2004:i:7:p:1127-1142

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    References listed on IDEAS

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    Cited by:

    1. F. Scherer, 2015. "First mover advantages and optimal patent protection," The Journal of Technology Transfer, Springer, vol. 40(4), pages 559-580, August.
    2. Giovanni B. Ramello, 2008. "Semiotica, diritti e mercato. Economia del marchio nel terzo millennio," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2008(1), pages 107-125.
    3. Margaret Oppenheimer & Helen LaVan & William Martin, 2015. "A Framework for Understanding Ethical and Efficiency Issues in Pharmaceutical Intellectual Property Litigation," Journal of Business Ethics, Springer, vol. 132(3), pages 505-524, December.
    4. Scherer, F.M., 2010. "Pharmaceutical Innovation," Handbook of the Economics of Innovation, Elsevier.
    5. Brekke, Kurt R. & Grasdal, Astrid L. & Holms, Tor Helge, 2009. "Regulation and pricing of pharmaceuticals: Reference pricing or price cap regulation?," European Economic Review, Elsevier, vol. 53(2), pages 170-185, February.
    6. Scherer, F. M., 2007. "Pharmaceutical Innovation," Working Paper Series rwp07-004, Harvard University, John F. Kennedy School of Government.
    7. Ramello, Giovanni B., 2007. "Access to vs. exclusion from knowledge: Intellectual property, efficiency and social justice," POLIS Working Papers 90, Institute of Public Policy and Public Choice - POLIS.
    8. Erdal Atukeren, 2005. "R&D Races and Spillovers between the EU and the US: Some Causal Evidence," KOF Working papers 05-105, KOF Swiss Economic Institute, ETH Zurich.
    9. Scherer, F. M., 2015. "First Mover Advantages and Optimal Patent Protection," Working Paper Series rwp14-053, Harvard University, John F. Kennedy School of Government.
    10. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters,in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484 National Bureau of Economic Research, Inc.

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