Intellectual Property, Tariffs, and International Trade Dynamics
48 Pages Posted: 7 May 2019
Date Written: 2019-05-01
The emergence of global value chains not only leads to a magnification of trade in intermediate inputs but also to an extensive technology diffusion among the different production units involved in arms-length relationships. In this context, the lack of enforcement of intellectual property rights has recently become a highly controversial subject of debate in the context of the China-U.S. trade negotiations. This paper analyzes the strategic interaction of tariff policies and the enforcement of intellectual property rights within a quantitative general equilibrium framework. Results indicate that, in principle, tariffs could be an effective deterrent for weak protections for intellectual property. Moreover, weakening enforcement may be a strong deterrent for raising tariffs. These results combined indicate that there is scope for international cooperation on these fronts.
Keywords: tariffs, intellectual property rights, technology capital transfers, international trade
JEL Classification: F13, F21, F41, F42, F51
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