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Complementarity in public and private intellectual property enforcement; implications for international standards

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  • Michael A Klein

Abstract

I examine the relationship between public enforcement of intellectual property (IP) rights and firm strategies to influence entry of non-deceptive counterfeit products: illegal copies of authentic goods purchased consciously by consumers. I assume that private enforcement investment determines the probability that a counterfeit entrant will be detected, while public investment determines the efficacy of the legal institutions responsible for enforcing IP law. Private and public enforcement serve distinct complementary roles, which combine to determine total IP protection in the economy. I show that differences in the investment incentives of the two entities that control enforcement lead to inefficiently low public investment in equilibrium. In this context, international efforts to impose stricter legal penalties against counterfeiters can be counterproductive: further reducing public enforcement and increasing counterfeit prevalence. In contrast, minimum quality standards can be implemented to better align incentives, encourage higher public enforcement, and reduce inefficiency.

Suggested Citation

  • Michael A Klein, 2020. "Complementarity in public and private intellectual property enforcement; implications for international standards," Oxford Economic Papers, Oxford University Press, vol. 72(3), pages 748-771.
    • Handle: RePEc:oup:oxecpp:v:72:y:2020:i:3:p:748-771.
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    File URL: http://hdl.handle.net/10.1093/oep/gpaa001
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    Cited by:

    1. Keisuke Hattori & Keisaku Higashida, 2023. "Who should be regulated: Genuine producers or third parties?," Journal of Economics, Springer, vol. 138(3), pages 249-286, April.
    2. Martínez-Sánchez, Francisco, 2020. "Preventing commercial piracy when consumers are loss averse," Information Economics and Policy, Elsevier, vol. 53(C).

    More about this item

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L43 - Industrial Organization - - Antitrust Issues and Policies - - - Legal Monopolies and Regulation or Deregulation
    • 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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