Intellectual Property Rights and North-South Trade / Judith C. Chin, Gene M. Grossman.

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Chin, Judith C

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w2769.Publication details: Cambridge, Mass. National Bureau of Economic Research 1988.Description: 1 online resource: illustrations (black and white)Subject(s):

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Abstract: We study the incentive that a government in the South has to protect the intellectual property rights of Northern firms, and the consequences of the decision taken by the South for welfare in the North and for efficiency of the world equilibrium. We conduct our analysis in the context of a competition between a single Northern producer and a single Southern producer selling some good to an integrated world market. In this competition, only the Northern firm has the ability to conduct R&D in order to lower its production costs, but the Southern firm can imitate costlessly if patent protection for process innovations is not enforced by the government of the South. We find that the interests of the North and the South generally conflict in the matter of protection of intellectual property, with the South benefiting from the ability to pirate technology and the North harmed by such actions. A strong system of intellectual property rights may or may not enhance world efficiency.

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Working Paper	Biblioteca Digital	Colección NBER	nber w2769 (Browse shelf(Opens below))	Not For Loan

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Previous	nber w27687 The Macroeconomic Effects of Macroprudential Policy: Evidence from a Narrative Approach /	nber w27688 What Determines School Segregation? The Crucial Role of Neighborhood Factors /	nber w27689 Discrimination and Racial Disparities in Labor Market Outcomes: Evidence from WWII /	nber w2769 Intellectual Property Rights and North-South Trade /	nber w27690 Life Cycle Cash Flows of Ventures /	nber w27691 Low Interest Rates, Policy, and the Predictive Content of the Yield Curve /	nber w27692 Union Membership Peaks in Midlife /	Next

November 1988.

We study the incentive that a government in the South has to protect the intellectual property rights of Northern firms, and the consequences of the decision taken by the South for welfare in the North and for efficiency of the world equilibrium. We conduct our analysis in the context of a competition between a single Northern producer and a single Southern producer selling some good to an integrated world market. In this competition, only the Northern firm has the ability to conduct R&D in order to lower its production costs, but the Southern firm can imitate costlessly if patent protection for process innovations is not enforced by the government of the South. We find that the interests of the North and the South generally conflict in the matter of protection of intellectual property, with the South benefiting from the ability to pirate technology and the North harmed by such actions. A strong system of intellectual property rights may or may not enhance world efficiency.