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On the trade, growth, and welfare effects of intellectual property rights protection.

To examine how intellectual property rights protection affects trade, growth, and welfare, I develop a two‐country R&D‐based growth model in which final goods firms in both countries determine the range of imported varieties in the overall use of intermediate inputs. I show that strengthening patent...

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Published in:Southern Economic Journal Vol. 85; no. 1; pp. 235 - 255
Main Author: Saito, Yuki
Format: Article
Published: Wiley-Blackwell Jul2018
Subjects:
Economic development
Intellectual property
International trade
Econometric models
Patents
Online Access:View this record in EBSCOhost
Summary:To examine how intellectual property rights protection affects trade, growth, and welfare, I develop a two‐country R&D‐based growth model in which final goods firms in both countries determine the range of imported varieties in the overall use of intermediate inputs. I show that strengthening patent protection in either country increases the range of imported varieties of intermediate goods and stimulates economic growth in the country that strengthened patent protection. Moreover, I also show that the Nash equilibrium level of patent protection is stronger than the globally optimal level of patent protection.