To 'B' or Not to 'B': A Welfare Analysis of Breaking Up Monopolies in an Endogenous Growth Model
18 Pages Posted: 6 Feb 2006
Date Written: November 2000
This paper studies the welfare consequences of a government regulation that forces a patented equipment to be supplied by a number of 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 monopolies protected by intellectual property rights be broken up? The answer is "no" in a Romer-type growth model, but there is 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