Abstract
This paper examines the growth effects of intellectual property right (IPR) protection in a quality-ladder model of endogenous growth. Stronger IPR protection, which reduces the imitation probability, increases the reward for innovation. However, stronger protection also gradually reduces the number of competitive sectors, in which innovation is easier than in monopolistic sectors. With free entry to R&D, the number of researchers in each remaining competitive sector increases, but the concentration of R&D activity raises the possibility of unnecessary duplication of innovation, thereby hindering growth. Consequently, imperfect rather than perfect protection maximizes growth. Welfare and scale effects are also examined.
Similar content being viewed by others
References
P. Aghion C. Harris P. Howitt J. Vickers (2001) ArticleTitleCompetition, Imitation and Growth with Step-by-Step Innovation Review of Economic Studies 68 467–492 Occurrence Handle10.1111/1467-937X.00177
P. Aghion C. Harris J. Vickers (1997) ArticleTitleCompetition and Growth with Step-by-Step Innovation: An Example European Economic Review 41 771–782 Occurrence Handle10.1016/S0014-2921(97)00036-6
K. Arrow (1962) Economic Welfare and the Allocation of Resources for Invention R. R. Nelson (Eds) The Rate and Direction of Inventive Activity: Economic and Social Factors Princeton University Press Princeton
Blundell, R., Griffith, R., Van Reenen, J. (1993) ``Knowledge Stocks, Persistent Innovations and Market Dominance: Evidence from a Panel of British Manufacturing Firms''. IFS Working Paper W93/19.
R. Blundell R. Griffith J. Reenen ParticleVan (1995) ArticleTitleDynamic Count Data Models of Technological Innovation Economic Journal 105 333–344 Occurrence Handle10.2307/2235494
T. F. Bresnahan (1985) ArticleTitlePost-entry Competition in the Plain Paper Copier Market American Economic Review 75 15–19
Dinopoulos, E., and Segerstrom, P. (2005): ``ATheory of North-South Trade and Globalization.'' mimeo, Stockholm School of Economics.
P. A. Geroski (1990) ArticleTitleInnovation, Technological Opportunity and Market Structure Oxford Economic Papers 42 586–602
G. Grossman E. Helpman (1991) ArticleTitleQuality Ladder in the Theory of Growth Review of Economic Studies 58 43–61 Occurrence Handle10.2307/2298044
G. Grossman E. Lai (2005) ArticleTitleInternational Protection of Intellectual Property American Economic Review 94 IssueID5 1635–1653 Occurrence Handle10.1257/0002828043052312
D. M. Gould W. C. Gruben (1996) ArticleTitleThe Role of Intellectual Property Rights in Economic Growth Journal of Development Economics 48 323–350 Occurrence Handle10.1016/0304-3878(95)00039-9
E. Helpman (1993) ArticleTitleInnovation, Imitation, and Intellectual Property Rights Econometrica 61 IssueID6 1247–80 Occurrence Handle10.2307/2951642
Heston, A., Summers, R., and Aten, B. (2002): Penn World Table Version 6.1, Center for International Comparisons at the University of Pennsylvania, October 2002.
T. Iwaisako K. Futagami (2003) ArticleTitlePatent Policy in an Endogenous Growth Model Journal of Economics 78 239–258 Occurrence Handle10.1007/s00712-002-0541-1
C. I. Jones (1995) ArticleTitleR&D-based Models of Economic Growth Journal of Political Economy 103 759–784 Occurrence Handle10.1086/262002
C. I. Jones J. Williams (2000) ArticleTitleToo Much of a Good Thing? The Economics of Investment in RD Journal of Economic Growth 5 IssueID1 65–85 Occurrence Handle10.1023/A:1009826304308
K. L. Judd (1985) ArticleTitleOn the Performance of Patents Econometrica 53 567–585 Occurrence Handle10.2307/1911655
S. Kortum (1993) ArticleTitleEquilibrium R&D and the Patent-R&D Ratio: U.S. Evidence American Economic Association Papers and Proceedings 83 450–457
S. Kortum J. Lerner (1998) ArticleTitleStronger Protection or Technological Revolution: What is Behind the Recent Surge in Patenting? Carnegie–Rochester Conference Series on Public Policy 48 247–304 Occurrence Handle10.1016/S0167-2231(98)00023-2
Y. Kwan E. Lai (2003) ArticleTitleIntellectual Property Rights Protection and Endogenous Economic Growth Journal of Economic Dynamics and Control 27 853–873 Occurrence Handle10.1016/S0165-1889(02)00018-0
Lambson, V., Phillips, K. (2005) ``Market Structure and Schumpeterian Growth''. Journal of Economic Behavior and Organization (forthcoming).
P. Michel J. Nyssen (1998) ArticleTitleOn Knowledge Diffusion, Patents’ Lifetime, and Innovation-based Endogenous Growth Annales d'Economie et de Statistique 49/50 77–103
T. Mukoyama (2003) ArticleTitleInnovation, Imitation, and Growth with Cumulative Technology Journal of Monetary Economics 50 361–380 Occurrence Handle10.1016/S0304-3932(03)00005-9
S. J. Nickell (1996) ArticleTitleCompetition and Corporate Performance Journal of Political Economy 104 724–746 Occurrence Handle10.1086/262040
T. O'Donoghue J. Zweimüller (2004) ArticleTitlePatents in a Model of Endogenous Growth Journal of Economic Growth 9 IssueID1 81–123 Occurrence Handle10.1023/B:JOEG.0000023017.42109.c2
R. T. Rapp R. P. Rozek (1990) ArticleTitleBenefits and Costs of Intellectual Property Protection in Developing Countries Journal of World Trade 24 IssueID5 74–102
P. S. Segerstrom (1998) ArticleTitleEndogenous Growth without Scale Effects American Economic Review 88 1290–1310
United States Chamber of Commerce (1987): Guidelines for Standards for the Protection and Enforcement of Intellectual Property Rights. Washington DC: United States Chamber of Commerce.
A. Young (1998) ArticleTitleGrowth without Scale Effects Journal of Political Economy 106 41–63 Occurrence Handle10.1086/250002
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Horii, R., Iwaisako, T. Economic Growth with Imperfect Protection of Intellectual Property Rights. J Econ 90, 45–85 (2007). https://doi.org/10.1007/s00712-006-0222-6
Received:
Revised:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s00712-006-0222-6