Keywords: innovation, imitation, intellectual property rights, foreign direct investment
Costly R&D and intellectual property rights protection
This paper summarises some of my product cycle models addressing the role of intellectual property rights (IPR) protection when all forms of R&D, including imitation, are costly. While the settings considered differ, the models all share the feature that a strengthening of IPR protection makes R&D more difficult, and thus causes firms to waste scarce resources "reinventing the wheel". Taking the perspective that stronger IPR protection increases the cost of R&D demonstrates how weak IPR protection can aid a country's development by enabling its firms to make efficient use of scarce resources and thus further advance the country's technology frontier.