To 'B' or Not to 'B': A Welfare Analysis of Breaking Up Monopolies in an Endogenous Growth Model
22 Pages Posted: 22 May 2000
Date Written: March 21, 2000
We study the welfare consequences of a government regulation that forces a patented equipment to be supplied by n independent producers. On the one hand, such a regulation hurts the value of a patent and therefore reduces activities in the R&D sector. On the other hand, the enhanced competition for the equipment improves efficiency in the manufacturing sector. Should we break up monopolies protected by intellectual property rights? The answer is no in a Romer-type growth model but we have sufficient reason to believe that the answer could be yes in a model advocated by Jones (1995).
Keywords: R&D, Growth, Competition Policy
JEL Classification: O31, O38, O41
Suggested Citation: Suggested Citation