Endogenous enforcement of intellectual property, North-South trade, and growth

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Abstract

After most countries have harmonized intellectual property rights (IPR) legislation as a consequence of signing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), the dispute about the optimal level of IPR-protection has shifted towards IPR-enforcement. This paper develops an endogenous growth framework with two open economies satisfying the classical North-South assumptions to study (a) the regions’ incentives to enforce IPR in a decentralized game, (b) the desired IPR-enforcement of the two regions in negotiation rounds on global harmonization and (c) the constrained-efficient enforcement level. We show how the different solutions relate to each other and how the results depend on the research productivity in the North and the regions’ relative market sizes. While growth rates substantially increase when IPR-enforcement is harmonized at the North’s desired level, our numerical simulation suggests that the South may also benefit in terms of long-run welfare.
Original languageEnglish
Pages (from-to)1074-1115
JournalMacroeconomic Dynamics
Volume19
Issue number5
Early online date17 Jan 2014
DOIs
Publication statusPublished - Jul 2015

Keywords

  • Endogenous Growth
  • Intellectual property rights
  • Trade
  • Dynamic Game

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