National patents, innovation and international agreements

Phillip McCalman

The Journal of International Trade & Economic Development, 2001, vol. 11, issue 1, 1-14

Abstract: One of the most contentious issues arising from the Uruguay Round of trade negotiations was the attempt to harmonize patent policy. However, previous theoretical models have failed to provide a clear rationale for the coordination of patent policy, indeed they imply that world welfare may decline as a result of coordination. This paper argues that the conclusions of previous studies have been derived from definitions of patents that neglect to specify their duration. As a consequence, the monopoly distortion associated with patents has been overemphasized. In contrast, this paper models the choice of the hazard of imitation under a patent as a policy variable. This allows for a more detailed analysis of the determinants of patent policy in an international context, and isolates two externalities when countries set patent policy independently. These externalities arise from a free-riding incentive (policy competition) and the international spillovers from an innovation. Since these considerations influence the patent strength in both developed and developing countries, patents set on a national basis are inefficient from a global perspective. This provides an economic rational for international coordination of patent policy.

Keywords: Intellectual Property Rights; Patents; Trade; World Trade Organization (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (10)

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DOI: 10.1080/09638190110093136

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