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Optimum tariffs and patent length in a model of North-South technology transfer

  • Vishwasrao, Sharmila
  • Gupta, Srabana
  • Benchekroun, Hassan

This paper constructs a theoretical model of trade and technology transfer to study a developing country’s choice of optimum tariffs and patent length. A Northern firm has a new good, which it must export to or produce in a Southern country. The Southern government simultaneously chooses an import tariff and patent length to maximize its welfare and induce foreign direct investment (FDI). The absence of patent protection requires high tariffs to induce FDI. This reduces welfare when the good is imported. A combination of patent length and tariffs can be used to reduce this loss and induce FDI. Thus Southern countries may have an incentive to protect patents, although never to the same extent as Northern countries.

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Article provided by Elsevier in its journal International Review of Economics & Finance.

Volume (Year): 16 (2007)
Issue (Month): 1 ()
Pages: 1-14

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Handle: RePEc:eee:reveco:v:16:y:2007:i:1:p:1-14
Contact details of provider: Web page: http://www.elsevier.com/locate/inca/620165

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  1. James A. Brander & Barbara J. Spencer, 1981. "Tariffs and the Extraction of Foreign Monopoly Rents under Potential Entry," Canadian Journal of Economics, Canadian Economics Association, vol. 14(3), pages 371-89, August.
  2. Neary, J Peter & Leahy, Dermot, 2000. "Strategic Trade and Industrial Policy towards Dynamic Oligopolies," Economic Journal, Royal Economic Society, vol. 110(463), pages 484-508, April.
  3. Glass, Amy Jocelyn & Saggi, Kamal, 2002. " Multinational Firms and Technology Transfer," Scandinavian Journal of Economics, Wiley Blackwell, vol. 104(4), pages 495-513, December.
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  5. Ethier, Wilfred J. & Markusen, James R., 1996. "Multinational firms, technology diffusion and trade," Journal of International Economics, Elsevier, vol. 41(1-2), pages 1-28, August.
  6. Scherer, F M, 1972. "Nordhaus' Theory of Optimal Patent Life: A Geometric Reinterpretation," American Economic Review, American Economic Association, vol. 62(3), pages 422-27, June.
  7. Michael Ferrantino, 1993. "The effect of intellectual property rights on international trade and investment," Review of World Economics (Weltwirtschaftliches Archiv), Springer, vol. 129(2), pages 300-331, June.
  8. M. Scott Taylor, 1993. "TRIPS, Trade, and Technology Transfer," Canadian Journal of Economics, Canadian Economics Association, vol. 26(3), pages 625-37, August.
  9. Wang, Jian-Ye & Blomstrom, Magnus, 1992. "Foreign investment and technology transfer : A simple model," European Economic Review, Elsevier, vol. 36(1), pages 137-155, January.
  10. Zigic, Kresimir, 2000. "Strategic trade policy, intellectual property rights protection, and North-South trade," Journal of Development Economics, Elsevier, vol. 61(1), pages 27-60, February.
  11. Jean O. Lanjouw, 1998. "The Introduction of Pharmaceutical Product Patents in India: "Heartless Exploitation of the Poor and Suffering"?," NBER Working Papers 6366, National Bureau of Economic Research, Inc.
  12. Vishwasrao, Sharmila, 1994. "Intellectual property rights and the mode of technology transfer," Journal of Development Economics, Elsevier, vol. 44(2), pages 381-402, August.
  13. Svedberg, Peter, 1979. "Optimal Tariff Policy on Imports from Multinationals," The Economic Record, The Economic Society of Australia, vol. 55(148), pages 64-67, March.
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  15. Katrak, Homi, 1977. "Multi-national Monopolies and Commercial Policy," Oxford Economic Papers, Oxford University Press, vol. 29(2), pages 283-91, July.
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