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Innovation And Imitation: Effects Of Intellectual Property Rights In A Product-Cycle Model Of Skills Accumulation

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  • Chen, Hung-Ju

Abstract

This paper analyzes the effects of stronger intellectual property rights (IPR) protection in the South on innovation, imitation, the pattern of production, and wage inequality based on a North–South product-cycle model with foreign direct investment (FDI) and skills accumulation. This quality-ladder model features innovative R&D in the North and imitative R&D in the South. Two types of innovations are considered: innovation targeting all products and innovation targeting only imitated products. We find that for both types of innovations, strengthening IPR protection reduces the innovation rate and raises the imitation rate. There is also an increase in the proportion of Northern unskilled labor and a decrease in Northern wage inequality. As for the pattern of production, strengthening IPR protection may reduce the extent of FDI.

Suggested Citation

  • Chen, Hung-Ju, 2018. "Innovation And Imitation: Effects Of Intellectual Property Rights In A Product-Cycle Model Of Skills Accumulation," Macroeconomic Dynamics, Cambridge University Press, vol. 22(6), pages 1475-1509, September.
    • Handle: RePEc:cup:macdyn:v:22:y:2018:i:06:p:1475-1509_00
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    1. Chen, Hung-Ju, 2019. "Innovation and FDI: Does the Target of Intellectual Property Rights Matter?," MPRA Paper 94692, University Library of Munich, Germany.
    2. Chen, Hung-Ju, 2018. "Innovation and imitation in a product-cycle model with FDI and cash-in-advance constraints," Journal of Macroeconomics, Elsevier, vol. 58(C), pages 91-114.
    3. Chen, Hung-Ju, 2021. "Innovation and FDI: Does the target of intellectual property rights protection matter?," Journal of International Money and Finance, Elsevier, vol. 118(C).
    4. Hung‐Ju Chen, 2018. "Innovation, FDI, and the long‐run effects of monetary policy," Review of International Economics, Wiley Blackwell, vol. 26(5), pages 1101-1129, November.
    5. Zheng, Zhijie & Huang, Chien-Yu & Yang, Yibai, 2020. "Patent protection, innovation, and technology transfer in a Schumpeterian economy," European Economic Review, Elsevier, vol. 129(C).

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    More about this item

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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