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Economic Development and Stage-Dependent IPR

Listed author(s):
  • Bharat Diwakar
  • Gilad Sorek

We study growth-maximizing Intellectual Property Rights (IPR) policy for developing economy in a close Overlapping-Generations model. We first show that R&D-based growth in such economy is subject to threshold externalities and transitional dynamics. Then we show that the IPR policy that maximizes output growth rates is stage-dependent: in early phases of development weak IPR protection may be necessary to sustain and to fasten economic growth. This is because weaker IPR protection shifts income from the old to the young generation and thereby enhancing saving and investment, which otherwise are insu¢cient to initiate growth. However as the economy develops and growth sustains optimal IPR protection tightens.

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File URL: http://cla.auburn.edu/econwp/Archives/2015/2015-16.pdf
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Paper provided by Department of Economics, Auburn University in its series Auburn Economics Working Paper Series with number auwp2015-16.

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Date of creation: Oct 2015
Handle: RePEc:abn:wpaper:auwp2015-16
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Web page: http://cla.auburn.edu/economics/

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