Economic Growth with Imperfect Protection of Intellectual Property Rights
Osaka University, International Public Policy (OSIPP) Discussion Paper
37 Pages Posted: 15 Aug 2005
Date Written: August 2005
The growth effects of intellectual property right (IPR) protection are examined in a quality-ladder model of endogenous growth. Stronger IPR protection, which reduces the probability of imitation, raises the reward for innovation. However, stronger protection reduces the number of competitive sectors, in which it is easier to innovate than in monopolistic sectors, thus concentrating researchers into fewer competitive sectors. As R&D projects take time until they are completed, concentration of R&D activity in a field raises the possibility of duplication of innovation, thereby hindering growth. In several settings, we show that imperfect, rather than perfect, protection maximizes growth.
Keywords: Intellectual property rights, endogenous growth, quality ladder, imitation, leapfrogging, duplication
JEL Classification: O31, O34, O41
Suggested Citation: Suggested Citation