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A note on global warfare in pharmaceutical patenting

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  • F. M. Scherer

Abstract

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 over plausible discovery impairment and income utility combinations, especially when rent-seeking behavior leads to an expansion of R&D outlays exhausting appropriable rents.

Suggested Citation

  • F. M. Scherer, 2003. "A note on global warfare in pharmaceutical patenting," Working Papers 03-11, Federal Reserve Bank of Philadelphia.
  • Handle: RePEc:fip:fedpwp:03-11
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    References listed on IDEAS

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    1. Deardorff, Alan V, 1992. "Welfare Effects of Global Patent Protection," Economica, London School of Economics and Political Science, vol. 59(233), pages 35-51, February.
    2. F. M. Scherer & Jayashree Watal, 2002. "Post-TRIPS Options for Access to Patented Medicines in Developing Nations," Journal of International Economic Law, Oxford University Press, vol. 5(4), pages 913-939, December.
    3. Keith E. Maskus, 1997. "Implications of regional and Multilateral Agreements for Intellectual Property Rights," The World Economy, Wiley Blackwell, vol. 20(5), pages 681-694, August.
    4. Keith E. Maskus, 1993. "Intellectual property rights and the Uruguay Round," Economic Review, Federal Reserve Bank of Kansas City, issue Q I, pages 10-25.
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    Keywords

    Pharmaceutical industry ; Patents;

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