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The Welfare Effects of Economic Integration when Products are Patented

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Abstract

This paper presents a model of economic growth where products are invented and patented, and where production involves fixed costs at the location of the plant. The model is used to assess the effects of instantaneous integration of a small, autarkic country into a larger economy on a) consumer welfare and b) the distribution of income. Consumer welfare in the small country rises immediately because of newly available products. Additionally, the welfare of all consumers rises due to economies of scale at the firm level. These latter benefits are gradually replaced by benefits stemming from newly invented products. The distribution of income changes due to a) the asymmetric distribution of patent ownership and b) changes in the ratio’s of skilled to unskilled workers.

Suggested Citation

  • Bas Straathof, 2004. "The Welfare Effects of Economic Integration when Products are Patented," DEGIT Conference Papers c009_024, DEGIT, Dynamics, Economic Growth, and International Trade.
    • Handle: RePEc:deg:conpap:c009_024
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    File URL: http://degit.sam.sdu.dk/papers/degit_09/C009_024.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    Economic integration; Income distribution; Product variety;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F15 - International Economics - - Trade - - - Economic Integration
    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models

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