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Published online by Cambridge University Press:  17 January 2014

Andreas Schäfer*
University of Leipzig
Maik T. Schneider
CER-ETH Center of Economic Research, ETH Zurich
Address correspondence to: Andreas Schäfer, Institute of Theoretical Economics/Macroeconomics, University of Leipzig, Grimmaische Strasse 12, 04109 Leipzig, Germany; e-mail:


Now that most countries have harmonized intellectual property right (IPR) legislation as a consequence of signing the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs), the dispute about the optimal level of IPR protection has shifted toward IPR enforcement. This paper develops an endogenous growth framework with two open economies satisfying the classical North–South assumptions to study (a) the regions' incentives to enforce IPRs in a decentralized game, (b) the desired IPR enforcement of the two regions in negotiation rounds on global harmonization, and (c) the constrained efficient enforcement level. We show how the different solutions relate to each other and how the results depend on the research productivity in the North and the regions' relative market sizes. Although growth rates increase substantially when IPR enforcement is harmonized at the North's desired level, our numerical simulation suggests that the South may also benefit in terms of long-run welfare.

Copyright © Cambridge University Press 2014 

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