Free Trade and Protection of Intellectual Property Rights: Can We Have One Without the Other?

Jacques Olivier and Ai Ting Goh

No 3127, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper is concerned with the interaction between trade policies and the protection of Intellectual Property Rights (IPRs). In particular, it investigates, within the framework of a general equilibrium model with endogenous growth, the welfare implications of an international agreement on one or both policy instruments. High tariffs and low patent protection both allow agents of an individual country to consume more respectively, through rent extraction redistributed by lump-sum transfers, and lower mark-up. Both high tariffs and low patent protection reduce the incentives for firms to do R&D, and, hence, growth. The main insight concerning optimal policies are first, that the two policy instruments are substitutes and second, that they are affected by the same Prisoner's Dilemma problem. As a consequence, an agreement in both policy instruments is needed to achieve any positive welfare gains, which supports the long standing claim of policy makers from developed countries that protection of IPRs should be included in multilateral trade agreements.

Keywords: Trade policy; Intellectual property rights; Multilateral trade aggreements (search for similar items in EconPapers)
JEL-codes: F13 O34 (search for similar items in EconPapers)
Date: 2002-01
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Citations: View citations in EconPapers (9)

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Related works:
Working Paper: Free Trade and Protection of Intellectual Property Rights: Can we have one without the other ? (2012)
Working Paper: Free trade and protection of intellectual property rights: can we have one without the other? (2001)
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