Growth and welfare effects of intellectual property rights when consumers differ in income

Christian Kiedaisch

Economic Theory, 2021, vol. 72, issue 4, No 4, 1170 pages

Abstract: Abstract This paper analyzes how changing the expected length of intellectual property (IP) protection T affects economic growth and the welfare of rich and poor consumers. The analysis is based on a product-variety model with non-homothetic preferences and endogenous markups in which, in accordance with empirical evidence, rich households consume a larger variety of goods than poorer ones. It is shown that growth is independent of T when there is perfect equality and that T can only substantially affect growth when there is a sufficient degree of inequality. When there is inequality, an increase in T that is applied to both new and previously granted innovations increases growth. A reduction in T that affects only new, but not previously granted innovations, can increase growth if wealth inequality is sufficiently high. In the case where increasing T increases growth, poorer households prefer a shorter length of protection T than richer ones.

Keywords: Intellectual property rights; Income inequality; Endogenous growth; Non-homothetic preferences; Consumption pattern (search for similar items in EconPapers)
JEL-codes: D30 E21 L16 O31 O34 O41 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (9)

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DOI: 10.1007/s00199-020-01322-9

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