Endogenous Enforcement of Intellectual Property, North-South Trade, and Growth
62 Pages Posted: 9 Aug 2011 Last revised: 14 Jun 2013
Date Written: June 13, 2013
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: Suggested Citation