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


Kiedaisch, Christian (2016). Growth and welfare effects of intellectual property rights when consumers differ in income. Working paper series / Department of Economics 221, University of Zurich.

Abstract

This paper analyzes how changing the expected length of intellectual property right (IPR) protection affects 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. Unlike in models with homothetic preferences, the effect of intellectual property (IP) protection on growth depends on the distribution of income: when the length of IP protection is (uniformly) increased, growth increases when there is inequality among households consuming IP protected goods, but stays constant when there is no such inequality. When wealth is unequally distributed, reducing the length of IP protection for new but not for previously issued IPRs can increase growth. In the case where increasing the length of IP protection increases growth, poor households prefer a shorter length of protection than richer ones, although they consume fewer IP protected goods.

This paper analyzes how changing the expected length of intellectual property right (IPR) protection affects 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. Unlike in models with homothetic preferences, the effect of intellectual property (IP) protection on growth depends on the distribution of income: when the length of IP protection is (uniformly) increased, growth increases when there is inequality among households consuming IP protected goods, but stays constant when there is no such inequality. When wealth is unequally distributed, reducing the length of IP protection for new but not for previously issued IPRs can increase growth. In the case where increasing the length of IP protection increases growth, poor households prefer a shorter length of protection than richer ones, although they consume fewer IP protected goods.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:O34, O31, L16, D30, O15
Uncontrolled Keywords:Intellectual property rights, income distribution, endogenous growth, nonhomothetic preferences
Language:English
Date:March 2016
Deposited On:23 Mar 2016 14:00
Last Modified:05 Apr 2016 20:12
Series Name:Working paper series / Department of Economics
Number of Pages:63
ISSN:1664-7041
Official URL:http://www.econ.uzh.ch/static/wp/econwp221.pdf
Related URLs:http://www.econ.uzh.ch/static/workingpapers-new.php
Permanent URL: https://doi.org/10.5167/uzh-123532

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