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A Note on Global Welfare in Pharmaceutical Patenting

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  • F. M. Scherer

Abstract

This paper revisits the question of whether global welfare is higher under a uniform world‐wide system of pharmaceutical product patents or with international rules allowing low‐income nations to free‐ride on the discoveries of firms in rich nations. Key variables include the extent to which free‐riding reduces the discovery of new drugs, the rent potential of rich as compared to poor nations, the ratio of the marginal utility of income in poor as compared to rich nations, and the competitive environment within which R&D decisions are made. Global welfare is found to be higher with free‐riding across plausible discovery impairment and income utility combinations, especially when rent‐seeking behaviour leads to an expansion of R&D outlays exhausting appropriable rents.

Suggested Citation

  • F. M. Scherer, 2004. "A Note on Global Welfare in Pharmaceutical Patenting," The World Economy, Wiley Blackwell, vol. 27(7), pages 1127-1142, July.
    • Handle: RePEc:bla:worlde:v:27:y:2004:i:7:p:1127-1142
    DOI: 10.1111/j.1467-9701.2004.00642.x
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    References listed on IDEAS

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    1. Deardorff, A.V, 1990. "Should Patent Protection Be Extended To All Countries?," Working Papers 259, Research Seminar in International Economics, University of Michigan.
    2. Alan V. Deardorff, 1990. "Should Patent Protection Be Extended to All Developing Countries?," The World Economy, Wiley Blackwell, vol. 13(4), pages 497-508, December.
    3. F. M. Scherer & Jayashree Watal, 2002. "Post-TRIPS Options for Access to Patented Medicines in Developing Nations," Journal of International Economic Law, Oxford University Press, vol. 5(4), pages 913-939, December.
    4. Janusz A. Ordover, 1991. "A Patent System for Both Diffusion and Exclusion," Journal of Economic Perspectives, American Economic Association, vol. 5(1), pages 43-60, Winter.
    5. F. M. Scherer & Dietmar Harhoff & J, rg Kukies, 2000. "Uncertainty and the size distribution of rewards from innovation," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 175-200.
    6. Keith E. Maskus, 1997. "Implications of regional and Multilateral Agreements for Intellectual Property Rights," The World Economy, Wiley Blackwell, vol. 20(5), pages 681-694, August.
    7. repec:fth:michin:259 is not listed on IDEAS
    8. Ove Granstrand, 1999. "The Economics and Management of Intellectual Property," Books, Edward Elgar Publishing, number 1651.
    9. Keith E. Maskus, 2000. "Intellectual Property Rights in the Global Economy," Peterson Institute Press: All Books, Peterson Institute for International Economics, number 99, January.
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    Cited by:

    1. Gaétan de Rassenfosse & Emilio Raiteri, 2022. "Technology Protectionism and the Patent System: Evidence from China," Journal of Industrial Economics, Wiley Blackwell, vol. 70(1), pages 1-43, March.
    2. Scherer, F. M., 2015. "First Mover Advantages and Optimal Patent Protection," Working Paper Series rwp14-053, Harvard University, John F. Kennedy School of Government.
    3. F. Scherer, 2015. "First mover advantages and optimal patent protection," The Journal of Technology Transfer, Springer, vol. 40(4), pages 559-580, August.
    4. Margaret Oppenheimer & Helen LaVan & William Martin, 2015. "A Framework for Understanding Ethical and Efficiency Issues in Pharmaceutical Intellectual Property Litigation," Journal of Business Ethics, Springer, vol. 132(3), pages 505-524, December.
    5. Ramello, Giovanni B., 2007. "Access to vs. exclusion from knowledge: Intellectual property, efficiency and social justice," POLIS Working Papers 90, Institute of Public Policy and Public Choice - POLIS.
    6. Erdal Atukeren, 2005. "R&D Races and Spillovers between the EU and the US: Some Causal Evidence," KOF Working papers 05-105, KOF Swiss Economic Institute, ETH Zurich.
    7. Brekke, Kurt R. & Grasdal, Astrid L. & Holms, Tor Helge, 2009. "Regulation and pricing of pharmaceuticals: Reference pricing or price cap regulation?," European Economic Review, Elsevier, vol. 53(2), pages 170-185, February.
    8. Scherer, F.M., 2010. "Pharmaceutical Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 539-574, Elsevier.
    9. Giovanni B. Ramello, 2008. "Semiotica, diritti e mercato. Economia del marchio nel terzo millennio," ECONOMIA E POLITICA INDUSTRIALE, FrancoAngeli Editore, vol. 2008(1), pages 107-125.
    10. Scherer, F. M., 2007. "Pharmaceutical Innovation," Working Paper Series rwp07-004, Harvard University, John F. Kennedy School of Government.
    11. Patricia M. Danzon & Eric L. Keuffel, 2014. "Regulation of the Pharmaceutical-Biotechnology Industry," NBER Chapters, in: Economic Regulation and Its Reform: What Have We Learned?, pages 407-484, National Bureau of Economic Research, Inc.

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