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INNOVATION AND IMITATION: EFFECTS OF INTELLECTUAL PROPERTY RIGHTS IN A PRODUCT-CYCLE MODEL OF SKILLS ACCUMULATION

Published online by Cambridge University Press:  11 July 2017

Hung-Ju Chen
Hung-Ju Chen*
Affiliation:
National Taiwan University
*
Address correspondence to: Hung-Ju Chen, Department of Economics, National Taiwan University, No. 1, Sec. 4, Roosevelt Road, Taipei 10617, Taiwan; Tel: 886-2-33668416; Fax: 886-2-33668454; e-mail: [email protected].
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Abstract

This paper analyzes the effects of stronger intellectual property rights (IPR) protection in the South on innovation, imitation, the pattern of production, and wage inequality based on a North–South product-cycle model with foreign direct investment (FDI) and skills accumulation. This quality-ladder model features innovative R&D in the North and imitative R&D in the South. Two types of innovations are considered: innovation targeting all products and innovation targeting only imitated products. We find that for both types of innovations, strengthening IPR protection reduces the innovation rate and raises the imitation rate. There is also an increase in the proportion of Northern unskilled labor and a decrease in Northern wage inequality. As for the pattern of production, strengthening IPR protection may reduce the extent of FDI.

Keywords

ImitationIPRR&DSkillsWage Inequality
Type
Articles
Information
Macroeconomic Dynamics , Volume 22 , Issue 6 , September 2018 , pp. 1475 - 1509
Copyright
Copyright © Cambridge University Press 2017 

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Footnotes

The author would like to thank the associate editor, two anonymous referees and Ming-Chia Li for helpful comments and suggestions. The financial supports provided by the Ministry of Science and Technology of Taiwan (grant number: MOST-104-2410-H-002-005-MY3) and the Program for Globalization Studies at the Institute for Advanced Studies in Humanities at National Taiwan University (grant number: NTU-ERP-103R890502) are gratefully acknowledged.

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