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Optimal intellectual property rights policy by an importing country

Author

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  • Ikeda, Takeshi
  • Tanno, Tadanobu
  • Yasaki, Yoshihito

Abstract

We study the optimal intellectual property rights policies of an importing country with a large market in which producers are not based. We show that the government should ban imitation if the cost of innovation is low, and should not allow free imitation regardless of the cost of innovation. Moreover, social welfare under a monopoly can exceed that under Cournot duopoly, given relatively low-cost innovation. Thus, when the cost of innovation is low, entry restriction can raise social welfare, even when innovators are based in other countries.

Suggested Citation

  • Ikeda, Takeshi & Tanno, Tadanobu & Yasaki, Yoshihito, 2021. "Optimal intellectual property rights policy by an importing country," Economics Letters, Elsevier, vol. 209(C).
    • Handle: RePEc:eee:ecolet:v:209:y:2021:i:c:s0165176521003906
    DOI: 10.1016/j.econlet.2021.110113
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    References listed on IDEAS

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    1. Amir, Rabah & Evstigneev, Igor & Wooders, John, 2003. "Noncooperative versus cooperative R&D with endogenous spillover rates," Games and Economic Behavior, Elsevier, vol. 42(2), pages 183-207, February.
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    3. Adriana Gama & Isabelle Maret & Virginie Masson, 2019. "Endogenous heterogeneity in duopoly with deterministic one-way spillovers," Annals of Finance, Springer, vol. 15(1), pages 103-123, March.
    4. Arghya Ghosh & Jota Ishikawa, 2018. "Trade liberalization, absorptive capacity and the protection of intellectual property rights," Review of International Economics, Wiley Blackwell, vol. 26(5), pages 997-1020, November.
    5. Anna Stepanova & Antonio Tesoriere, 2011. "R&D With Spillovers: Monopoly Versus Noncooperative And Cooperative Duopoly," Manchester School, University of Manchester, vol. 79(1), pages 125-144, January.
    6. Rabah Amir & Huizhong Liu & Dominika Machowska & Joana Resende, 2019. "Spillovers, subsidies, and second‐best socially optimal R&D," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 21(6), pages 1200-1220, December.
    7. Arijit Mukherjee & Uday Bhanu Sinha, 2013. "Patent Protection, Southern Innovation and Welfare in a North–South Trade Model," Economica, London School of Economics and Political Science, vol. 80(318), pages 248-273, April.
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    Cited by:

    1. Leandro M. Meller, 2022. "Patent Length and Breadth as Policy Instruments: A Systematic Review of Recent Contributions to the Theory of Optimal Patent Design," Working Papers 192, Red Nacional de Investigadores en Economía (RedNIE).
    2. Fuzhong Chen & Guohai Jiang & Kangyin Dong, 2022. "How do FDI inflows curvilinearly affect carbon emissions? Threshold effects of energy service availability and cleanliness," Australian Economic Papers, Wiley Blackwell, vol. 61(4), pages 798-824, December.

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    More about this item

    Keywords

    R&D investment; Innovation; Imitation; Intellectual property rights; Export destination market;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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