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Does intellectual property right promote innovations when pirates are innovators?

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  • Marjit, Sugata
  • Yang, Lei

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.

Suggested Citation

  • Marjit, Sugata & Yang, Lei, 2015. "Does intellectual property right promote innovations when pirates are innovators?," International Review of Economics & Finance, Elsevier, vol. 37(C), pages 203-207.
    • Handle: RePEc:eee:reveco:v:37:y:2015:i:c:p:203-207
    DOI: 10.1016/j.iref.2014.11.023
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    References listed on IDEAS

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    Cited by:

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    2. Liu, Baohua & Sun, Pei-Yu & Zeng, Yongliang, 2020. "Employee-related corporate social responsibilities and corporate innovation: Evidence from China," International Review of Economics & Finance, Elsevier, vol. 70(C), pages 357-372.

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    More about this item

    Keywords

    Intellectual Property Rights; R&D incentive of imitators;

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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