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Compulsory licensing, price controls, and access to patented foreign products

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  • Eric Saggi

    () (Department of Economics, Vanderbilt University)

  • Saggi Saggi

    () (Department of Economics, Vanderbilt University)

Abstract

Motivated by existing multilateral rules regarding intellectual property, we develop a North-South model to highlight the dual roles price controls and compulsory licensing play in determining Southern access to a patented Northern product. The Northern patent-holder chooses whether and how to work its patent in the South (either via entry or voluntarily licensing) while the South determines the price control and whether to issue a compulsory license. The threat of compulsory licensing benefits the South and also increases global welfare when the North-South technology gap is significant. The price control and compulsory licensing are complementary instruments from the Southern perspective.

Suggested Citation

  • Eric Saggi & Saggi Saggi, 2012. "Compulsory licensing, price controls, and access to patented foreign products," Vanderbilt University Department of Economics Working Papers 12-00006, Vanderbilt University Department of Economics.
  • Handle: RePEc:van:wpaper:vuecon-12-00006
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Joerg Baten & Nicola Bianchi & Petra Moser, 2015. "Does Compulsory Licensing Discourage Invention? Evidence From German Patents After WWI," NBER Working Papers 21442, National Bureau of Economic Research, Inc.
    2. Baten, Joerg & Bianchi, Nicola & Moser, Petra, 2017. "Compulsory licensing and innovation – Historical evidence from German patents after WWI," Journal of Development Economics, Elsevier, vol. 126(C), pages 231-242.
    3. Eric W. Bond & Ben Zissimos, 2017. "Patent Breadth In An International Setting," Economic Inquiry, Western Economic Association International, vol. 55(3), pages 1538-1555, July.
    4. Seifert, Jacob, 2013. "Compulsory Licensing, Innovation and Welfare," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79778, Verein für Socialpolitik / German Economic Association.
    5. Kamal Saggi, 2016. "Trade, Intellectual Property Rights, and the World Trade Organization," Vanderbilt University Department of Economics Working Papers 16-00014, Vanderbilt University Department of Economics.
    6. Jacob Seifert, 2015. "Welfare effects of compulsory licensing," Journal of Regulatory Economics, Springer, vol. 48(3), pages 317-350, December.
    7. Chatterjee, Chirantan & Kubo, Kensuke & Pingali, Viswanath, 2015. "The consumer welfare implications of governmental policies and firm strategy in markets for medicines," Journal of Health Economics, Elsevier, vol. 44(C), pages 255-273.
    8. Eric W Bond & Kamal Saggi, 2017. "Price controls versus compulsory licensing: effects on patent-holders and consumers," Vanderbilt University Department of Economics Working Papers 17-00013, Vanderbilt University Department of Economics.

    More about this item

    Keywords

    Patented Goods; Compulsory Licensing; Price Controls; Quality; Welfare;

    JEL classification:

    • F0 - International Economics - - General

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