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Taste for Exclusivity and Intellectual Property Rights

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  • Kiedaisch, Christian
  • Grafenhofer, Dominik

Abstract

This article analyzes the effects of intellectual property rights protection on innovation in a quality-ladder model in which part of the consumers value being the exclusive consumers of the newest generation of a good. In the case of a monopoly innovator, we show that reducing IP protection can increase the average innovation rate by regularly destroying exclusivity and thereby creating incentives to invent new exclusive goods. In the case where R&D is undertaken by entrants, the innovation rate, however, increases in the strength of IP protection for most market structures. In each case, we derive the welfare-maximizing strength of IP protection.

Suggested Citation

  • Kiedaisch, Christian & Grafenhofer, Dominik, 2013. "Taste for Exclusivity and Intellectual Property Rights," VfS Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 80017, Verein für Socialpolitik / German Economic Association.
  • Handle: RePEc:zbw:vfsc13:80017
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • L40 - Industrial Organization - - Antitrust Issues and Policies - - - General

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