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INTELLECTUAL PROPERTY AND PRODUCT MARKET COMPETITION REGULATIONS IN A MODEL WITH TWO R&D PERFORMING SECTORS

  • Vahagn Jerbashian
Abstract

I analyze the impact of intellectual property and product market competition regulations on innovation and long-run growth in an endogenous growth model with two R&D performing sectors. I show that strengthening intellectual property rights and competition in a sector increases its R&D investments. However, these policies adversely affect R&D investments in the other sector because of increased factor competition between the sectors. As a result, the overall impact of such policies on economic growth is ambiguous. I perform a numerical exercise in an attempt to resolve this ambiguity. This exercise suggests that strengthening intellectual property rights increases economic growth, but higher competition has a very limited effect on growth.

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Corresponding author
Address correspondence to: Vahagn Jerbashian, University of Barcelona, Av. Diagonal 696, 08034 Barcelona, Spain; e-mail: vahagn.jerbashian@ub.edu. Phone: +34934034890.
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I would like to thank three anonymous referees, Marta Aloi, Stefan Bechtold, Pedro Mazeda Gil, Xavier Raurich, Marc Teignier and seminar participants at the Munich Summer Institute (2017), the Armenian Economic Association Meetings (2017), the HenU/INFER Workshop on Applied Macroeconomics (2017), and the University of Barcelona (2016) for thoughtful comments. I gratefully acknowledge the financial support from the Spanish Ministry of Education and Science through grant ECO2015-66701-R, from the Generalitat of Catalonia through grant 2014SGR493, and from the Grant Agency of the Czech Republic through project P402/12/G097. All errors remain my own. CERGE-EI is a joint workplace of the Center for Economic Research and Graduate Education, Charles University in Prague, and the Economics Institute of Academy of Sciences of the Czech Republic.

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Macroeconomic Dynamics
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