Intellectual Property Rights, Licensing, and Innovation

Guifang Yang ; Maskus, Keith E.

World Bank, Washington, DC

关键词: ASYMMETRIC INFORMATION;    BERTRAND COMPETITION;    CONSUMERS;    DEVELOPED COUNTRIES;    DEVELOPMENT ECONOMICS;   

DOI  :  10.1596/1813-9450-2973
RP-ID  :  WPS2973

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

There is considerable debate ineconomics literature on whether a decision by developingcountries to strengthen their protection of intellectualproperty rights (IPRs) will increase or reduce their accessto modern technologies invented by industrial countries.This access can be achieved through technology transfer ofvarious kinds, including foreign direct investment andlicensing. Licensing is the focus of this paper.To theextent that inventing firms choose to act moremonopolistically and offer fewer technologies on the market,stronger IPRs could reduce international technology flows.However, to the extent that IPRs raise the returns toinnovation and licensing, these flows would expand. Intheory, the outcome depends on how IPRs affect severalvariables-the costs of, and returns to, internationallicensing; the wage advantage of workers in poor countries;the innovation process in industrial countries; and theamount of labor available for innovation and production. Theauthors develop a theoretical model in which firms in theNorth (industrial countries) innovate products of higherquality levels and decide whether to produce in the North ortransfer production rights to the South (developingcountries) through licensing. Different quality levels ofeach product are sold in equilibrium because of differencesin consumers' willingness-to-pay for qualityimprovements. Contracting problems exist because theinventors in the North must indicate to licensees in theSouth whether their product is of higher or lower qualityand also prevent the licensees from copying the technology.So, constraints in the model ensure that the equilibriumflow of licensing higher-quality goods meets theseobjectives. When the South strengthens its patent rights,copying by licensees is made costlier but the returns tolicensing are increased. This change affects the dynamicdecisions regarding innovation and technology transfer,which could rise or fall depending on market parameters,including the labor available for research and production.Results from the model show that the net effects depend onthe balance between profits made by the Northern licensorand lower labor costs in the South. If the size of the laborforce used in Northern innovation compared with that used inproducing goods in both the North and South is sufficientlysmall (a condition that accords with reality), stronger IPRsin the South would lead to more licensing and innovation.This change would also increase the Southern wage relativeto the Northern wage. So, in this model a decision bydeveloping countries to increase their patent rights wouldexpand global innovation and increase technology transfer.This result is consistent with recent empirical evidence. Itshould be noted that while the results suggest thatinternational agreements to strengthen IPRs should expandglobal innovation and technology transfer through licensing,the model cannot be used for welfare analysis. Thus, whilethe developing countries enjoy more inward licensing, thecost per license could be higher, and prices could alsorise, with an unclear overall effect on economic well-being.