Endogenous R&D and Intellectual Property Laws in Developed and Emerging Economies

Bagchi, Aniruddha and Roy, Abhra (2011): Endogenous R&D and Intellectual Property Laws in Developed and Emerging Economies. Forthcoming in: Southern Economic Journal

Abstract

The incentive of providing protection of intellectual property has been analyzed, both for an emerging economy as well as for a developed economy. The optimal patent length and the optimal patent breadth within a country are found to be positively related to each other for a fixed structure of laws abroad. Moreover, a country can respond to stronger patent protection abroad by weakening its patent protection under certain circumstances and by strengthening its patent protection under other circumstances. These results depend upon the curvature of the R&D production function. Finally, we investigate the impact of an increase in the willingness-to-pay in the emerging economy and find conditions under which there is an improvement in both patent length as well as patent breadth in the emerging economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Patent Length, Patent Breadth, Productivity
• Subjects: F - International Economics > F2 - International Factor Movements and International Business > F20 - General; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O34 - Intellectual Property and Intellectual Capital; O - Economic Development, Innovation, Technological Change, and Growth > O3 - Innovation ; Research and Development ; Technological Change ; Intellectual Property Rights > O31 - Innovation and Invention: Processes and Incentives

References

Bulow, Jeremy I., John D. Geanakoplos, and Paul D. Klemperer. 1985. Multimarket Oligopoly: Strategic Substitutes and Complements. Journal of Political Economy 93: 488-511.

Chen, Yongmin, and Thitima Puttitanun. 2005. Intellectual Property Rights and Innovation in Developing Countries. Journal of Development Economics 78: 474-93.

DeBrock, Lawrence M. 1985. Market Structure, Innovation, and Optimal Patent Life. Journal of Law and Economics 28: 223-44.

Denicolò, Vincenzo. 1996. Patent Races and Optimal Patent Breadth and Length. Journal of Industrial Economics 44: 249-65.

Federal Trade Commission. 2002. Generic Drug Entry Prior to Patent Expiration: An FTC Study. Washington, DC.

Federal Trade Commission. 2007. Protecting Consumer Access to Generic Drugs: The Benefits of a Legislative Solution to Anticompetitive Patent Settlements in the Pharmaceutical Industry. Washington, DC.

Gallini, Nancy T. 1992. Patent Policy and Costly Imitation. RAND Journal of Economics 23: 52-63.

Gilbert, Richard, and Carl Shapiro. 1990. Optimal Patent Length and Breadth. RAND Journal of Economics 21: 106-12.

Grossman, Gene M., and Edwin L. C. Lai. 2004. International Protection of Intellectual Property. American Economic Review 94: 1635-53.

Kim, Jeong-Eon, and Harvey E. Lapan. 2008. Heterogeneity of Southern Countries and Southern Intellectual Property Rights Policy. Canadian Journal of Economics 41: 894-925.

Klemperer, Paul. 1990. How Broad Should the Scope of Patent Protection Be? RAND Journal of Economics 21: 113-30

Lai, Edwin L. C., and Larry D. Qiu. 2003. The North’s Intellectual Property Rights Standard for the South? Journal of International Economics 59: 183-209.

Maskus, Keith E. 2000. Intellectual Property Rights in the Global Economy. Washington DC: Peterson Institute for International Economics.

Mukherjee, Arijit, and Enrico Pennings. 2004. Imitation, Patent Protection, and Welfare. Oxford Economic Papers 56: 715-33.

Park, Walter G., and Smita Wagh. 2002. Index of Patent Rights. In Economic Freedom of the World: 2002 Annual Report , edited by James Gwartney and Robert Lawson. Vancouver, B.C: The Fraser Institute, pp. 33-41.

Porter, Michael E., and Scott Stern. 2001. National Innovative Capacity. In The Global Competitiveness Report 2001-2002, edited by Klaus Schwab, Michael E. Porter, and Jeffrey D. Sachs. New York: Oxford University Press, pp. 102-119.

Ranbaxy. Ranbaxy and Pfizer Settle Lipitor Litigation Worldwide. Accessed December 2010. Available at http://www.ranbaxyusa.com/newsdisp180608.aspx.

Scotchmer, Suzanne. 2004. Innovation and Incentives. Cambridge, MA: MIT Press.

Scotchmer, Suzanne. The Political Economy of Intellectual Property Treaties. 2004. Journal of Law, Economics and Organization 20: 415-37.

Tirole, Jean. 1988. The Theory of Industrial Organization. Cambridge, MA: MIT Press.

Wright, Donald J. Optimal Global Patent Design. 2005. Journal of Institutional and Theoretical Economics 161: 18-37.

Yang, Yong. 1998. Why Do Southern Countries Have Little Incentive to Protect Northern Intellectual Property Rights? Canadian Journal of Economics 31: 800-16.

Zigic, Kresimir. 1998. Intellectual Property Rights Violations and Spillovers in North-South Trade. European Economic Review 42: 1779-99.