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Endogenous Recombinant Growth and Intellectual Property Rights

Carla Marchese (), Simone Marsiglio (), Fabio Privileggi () and Giovanni Ramello ()

IEL Working Papers from Institute of Public Policy and Public Choice - POLIS

Abstract: We show that, even in a framework in which monopolistic exploitation of patents does not occur, patents still give rise to serious drawbacks. We build on Weitzman's (1998) recombinant growth model which provides a stylized but clear description of the formation of knowledge externalities. In our framework a benevolent government buys immediately new patents in a competitive market and releases their contents for free. We show that inefficiencies nevertheless arise and welfare can be improved by correcting the market price through a tax-subsidy scheme. We characterize the (asymptotic) steady state equilibrium, and some properties of the transitional path. We show that if certain conditions are met, then the economy will converge to its (asymptotic) balanced growth path, and along such a path growth will be independent of the policy parameter; conversely, transition dynamics are affected by the choice of the policy parameter. We then quantitatively analyze the effect of different policy interventions on welfare, and show that stricter tax (weaker appropriability) regimes lead to higher social welfare.

Keywords: Endogenous Recombinant Growth; Intellectual Property Rights; Knowledge Production; Welfare (search for similar items in EconPapers)
JEL-codes: K11 L16 L43 O31 O34 O41 (search for similar items in EconPapers)
Pages: 40 pages
Date: 2017-05
New Economics Papers: this item is included in nep-dcm, nep-ino, nep-ipr, nep-knm and nep-tid
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Related works:
Journal Article: ENDOGENOUS RECOMBINANT GROWTH AND INTELLECTUAL PROPERTY RIGHTS (2019) Downloads
Working Paper: Endogenous Recombinant Growth and Intellectual Property Rights (2017) Downloads
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