Trade Liberalization and Industry Protection in Russia
This paper presents an endogenous growth model for two regions with assymetric initial stocks of knowledge. The novel features of the paper lie in modelling the differentiation of regions into an innovator and an imitator as endogenous, and analyzing optimal intellectual property rights (IPRs) for the imitator's catching-up. Weak IPR protection and a high imitation rate allow the initially knowledge-scarce imitator region to accumulate sufficient knowledge and switch to innovation, at which time tight IPRs become socially optimal. Policy implications for the international harmonization of IPRs under are assessed in light of the theoretical results.
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