Does intellectual property right promote innovations when pirates are innovators?

Sugata Marjit, Lei Yang

Research output: Journal article publicationJournal articleAcademic researchpeer-review

4 Citations (Scopus)

Abstract

We identify two new channels through which Intellectual Property Rights (IPRs) may affect R&D incentives that are in stark contrast to conventional wisdom. First, in a model with a simple technology we find that IPRs may deter innovations when pirates are potential innovators. Second, in a model with a complex technology we find that IPR, even in a static situation, increases consumer surplus. We show that strong IPRs lead not only to the decrease in the "competition effect", but also the increase in the "innovation effect" in the current period when there exists international specialization in R&D. When "innovation effect" dominates "competition effect", the strengthening of patent protection promotes both innovation and consumer surplus.
Original languageEnglish
Pages (from-to)203-207
Number of pages5
JournalInternational Review of Economics and Finance
Volume37
DOIs
Publication statusPublished - 1 May 2015

Keywords

  • Intellectual property rights
  • R&D incentive of imitators

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

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