nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2013‒07‒20
two papers chosen by
Giovanni Ramello
Universita' Amedeo Avogadro

  1. Intellectual Property Rights and Foreign Direct Investment: A Welfare Analysis By Hitoshi Tanaka; Tatsuro Iwaisako
  2. The regional exhaustion of intellectual property By Kamal Saggi

  1. By: Hitoshi Tanaka (Faculty of Economics, Hokkai-Gakuen University); Tatsuro Iwaisako (Graduate School of Economics, Osaka University)
    Abstract: This paper examines how intellectual property rights (IPR) protection affects innovation and foreign direct investment (FDI) using a North-South quality-ladder model incorporat- ing the exogenous and costless imitation of technology and subsidy policies for both R&D and FDI. We show that for the interior steady state to be stable, either R&D or FDI sub- sidy rates must be positive in the costless imitation model. Our findings also indicate that strengthening IPR protection promotes both innovation and FDI. Moreover, a strengthen- ing of IPR protection can also improve welfare if the initial IPR protection in the South is weak.
    Keywords: foreign direct investment, innovation, intellectual property rights protection
    JEL: F43 O33 O34
    Date: 2013–07
  2. By: Kamal Saggi (Vanderbilt University)
    Abstract: This paper analyzes the causes and consequences of regional exhaustion of intellectual property, a policy regime under which a set of countries permit parallel imports from one another but not from the rest of the world. A three-country model is developed in which two high-income countries jointly choose their common exhaustion policy among national (NE), international (IE), or regional exhaustion (RE). The key result is that the two high-income countries choose to implement RE when they are relatively similar to each other and sufficiently high-income relative to the third country. We also consider a scenario where the policy choice set is restricted to non-discriminatory exhaustion regimes (i.e. NE or IE). Comparing the policy outcome of this constrained scenario with that of the core model, we show that the option to choose RE makes all countries better off.
    Keywords: Regional Exhaustion of IPRs, National Exhaustion, International Exhaustion, Parallel imports, Market power, Welfare
    JEL: F1
    Date: 2013–07–14

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