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ENDOGENOUS ENFORCEMENT OF INTELLECTUAL PROPERTY, NORTH–SOUTH TRADE, AND GROWTH

Published online by Cambridge University Press:  17 January 2014

Andreas Schäfer  and
Maik T. Schneider
Andreas Schäfer*
Affiliation:
University of Leipzig
Maik T. Schneider
Affiliation:
CER-ETH Center of Economic Research, ETH Zurich
*
Address correspondence to: Andreas Schäfer, Institute of Theoretical Economics/Macroeconomics, University of Leipzig, Grimmaische Strasse 12, 04109 Leipzig, Germany; e-mail: [email protected].
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Abstract

Now that most countries have harmonized intellectual property right (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 toward 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 IPRs 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. Although growth rates increase substantially 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.

Keywords

Endogenous GrowthIntellectual Property RightsTradeDynamic Game
Type
Articles
Information
Macroeconomic Dynamics , Volume 19 , Issue 5 , July 2015 , pp. 1074 - 1115
Copyright
Copyright © Cambridge University Press 2014 

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