nep-ipr New Economics Papers
on Intellectual Property Rights
Issue of 2016‒09‒11
two papers chosen by
Giovanni Ramello
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. Patents vs R&D Subsidies on Income Inequality By Chu, Angus C.; Cozzi, Guido
  2. Exhaustion of Digital Goods: An Economic Perspective By Wolfgang Kerber

  1. By: Chu, Angus C.; Cozzi, Guido
    Abstract: This study explores the effects of patent protection and R&D subsidies on economic growth and income inequality using a Schumpeterian growth model with heterogeneity in household asset holdings. We find that although strengthening patent protection and raising R&D subsidies have the same macroeconomic effect of stimulating economic growth, they have drastically different microeconomic implications on income inequality. Specifically, strengthening patent protection increases income inequality whereas raising R&D subsidies decreases (increases) it if the quality step size is sufficiently small (large). An empirically realistic quality step size is smaller than the threshold implying a negative effect of R&D subsidies on income inequality. We also calibrate the model to provide a quantitative analysis and find that strengthening patent protection causes a moderate increase in income inequality and a negligible increase in consumption inequality whereas raising R&D subsidies causes a significant decrease in both income inequality and consumption inequality.
    Keywords: R&D subsidies, patents, income inequality, economic growth
    JEL: D3 O3 O4
    Date: 2016–09
  2. By: Wolfgang Kerber (University of Marburg)
    Abstract: The "UsedSoft" decision of the Court of Justice of the European Union (CJEU) about the right of a buyer of a downloaded copy of a software to resell this copy triggered a controversial discussion about the applicability of the "exhaustion" rule (US: first-sale doctrine) to copyright-protected digital goods (as, e.g., also e-books). This paper offers, in a first step, a systematic analysis and assessment of economic reasonings that have been discussed in the literature about exhaustion, and applies this framework, in a second step, to downloaded digital creative works. An important result is that digitalisation, on one hand, changes considerably the benefits and costs of exhaustion, esp. in regard to the danger of jeopardizing the incentives for copyright owners. On the other hand, however, also the costs of imposing restrictions might be high and even increase in a digital economy. This leads to the conclusion that it is necessary to think seriously about the legal limits for the restrictions that copyright owners should be allowed to impose on their customers. However, these limits might be drawn also by other legal instruments than copyright exhaustion.
    Keywords: Digital goods, copyright exhaustion, first-sale doctrine, post-sale restrictions
    JEL: K20 L86 O34
    Date: 2016

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