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IPR protection vs. innovation subsidy: What is the choice for the emerging South?

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  • Darong Dai
  • Kunrong Shen

Abstract

In this paper, we use a classical variety-expanding growth model to analyze the policy or institutional-arrangement choice for the Southern government who faces the tradeoff between imitating Northern innovation without cost and encouraging domestic innovation. We assume that the Southern government fully respects the principle of non-discrimination and hence treats both imitations, i.e., imitation of Northern innovation and imitation of domestic innovation, equally. For a given state of the economy, we explicitly and uniquely establish an optimal degree of intellectual property rights (IPR) protection for the South. Then, we find that there is a complementary relationship between optimal IPR protection and the innovation subsidy policy, which implies that they form an effective policy mix, hence offering a useful insight for avoiding ineffective policy conflicts widely occurred in real-world economies.

Suggested Citation

  • Darong Dai & Kunrong Shen, 2016. "IPR protection vs. innovation subsidy: What is the choice for the emerging South?," The Journal of International Trade & Economic Development, Taylor & Francis Journals, vol. 25(3), pages 426-451, June.
  • Handle: RePEc:taf:jitecd:v:25:y:2016:i:3:p:426-451
    DOI: 10.1080/09638199.2015.1060625
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    Cited by:

    1. Darong Dai, 2018. "Intellectual property rights and R&D subsidies: are they complementary policies?," Journal of Economics, Springer, vol. 125(1), pages 27-49, September.
    2. Li, Beili & Fan, Xu & Li, Jianjiang, 2024. "Natural resource dependence and government-guided social forces participation in R&D investment: An analysis of the resource curse hypothesis," Resources Policy, Elsevier, vol. 89(C).

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