Endogenous Enforcement of Intellectual Property, North-South Trade, and Growth

62 Pages Posted: 9 Aug 2011 Last revised: 14 Jun 2013

See all articles by Andreas Schäfer

Andreas Schäfer

University of Leipzig/Institute for Theoretical Economics/Macroeconomics

Maik T. Schneider

University of Bath

Date Written: June 13, 2013

Abstract

While most countries have harmonized intellectual property rights (IPR) legislation, the dispute about the optimal level of IPR-enforcement remains. This paper develops an endogenous growth framework with two open economies satisfying the classical North-South assumptions to study (a) IPR-enforcement in a decentralized game and (b) the desired globally-harmonized IPR-enforcement of the two regions. The results are compared to the constrained-efficient enforcement level. Our main insights are: The regions' desired harmonized enforcement levels are higher than their equilibrium choices, however, the gap between the two shrinks with relative market size. While growth rates substiantially increase 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: Dynamic Game, Endogenous Growth, Intellectual Property Rights, Trade

JEL Classification: F10, F13, O10, O30

Suggested Citation

Schäfer, Andreas and Schneider, Maik T., Endogenous Enforcement of Intellectual Property, North-South Trade, and Growth (June 13, 2013). Available at SSRN: https://ssrn.com/abstract=1907231 or http://dx.doi.org/10.2139/ssrn.1907231

Andreas Schäfer

University of Leipzig/Institute for Theoretical Economics/Macroeconomics ( email )

Grimmaische Str. 12
D-04109 Leipzig, DE
Germany

Maik T. Schneider (Contact Author)

University of Bath ( email )

Claverton Down
Bath, BA2 7AY
United Kingdom

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