DP10602 Intellectual Property Rights Protection and Trade

Author(s): Emmanuelle Auriol, Sara Biancini, Rodrigo Paillacar
Publication Date: May 2015
Keyword(s): developing countries, imitation, innovation, intellectual property rights, oligopoly, trade policy
JEL(s): F12, F13, F15, L13, O31, O34
Programme Areas: Industrial Organization, International Trade and Regional Economics, Development Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=10602

The paper studies developing countries' incentives to protect intellectual property rights (IPR). IPR enforcement is U-shaped in a country's market size relative to the aggregated market size of its trade partners: small/poor countries protect IPR to get access to advanced economies' markets, while large emerging countries tend to free-ride on rich countries' technology to serve their internal demand. Asymmetric protection of IPR, strict in the North and lax in the South, leads in many cases to a higher level of innovation than universal enforcement. An empirical analysis conducted with panel data covering 112 countries and 45 years supports the theoretical predictions.