Skip to main page content
U.S. flag

An official website of the United States government

Dot gov

The .gov means it’s official.
Federal government websites often end in .gov or .mil. Before sharing sensitive information, make sure you’re on a federal government site.

Https

The site is secure.
The https:// ensures that you are connecting to the official website and that any information you provide is encrypted and transmitted securely.

Access keys NCBI Homepage MyNCBI Homepage Main Content Main Navigation
. 2021;19(3):427-450.
doi: 10.1007/s40953-021-00243-1. Epub 2021 Jul 7.

The Dilemma of Intellectual Property Agreements and R&D in Developing Economies: A Game Theory Approach

Mhamed-Ali El-Aroui  1 , Selma Dellagi  2 , Fouad Ben Abdelaziz  3
Affiliations

The Dilemma of Intellectual Property Agreements and R&D in Developing Economies: A Game Theory Approach

Mhamed-Ali El-Aroui et al. J Quant Econ. 2021.

Abstract

This paper models and predicts how the strengthening of intellectual property (IP) protection will impact R&D in developing economies. International agreements such as TRIPs and free trade agreements are enhancing the level of international control on IP. This is changing deeply the R&D environment in developing economies by restraining illegal channels of knowledge accumulation such as imitation, reverse engineering and piracy. An asymmetric and non-cooperative two-stage (R&D-Production) game is proposed to model a developing market where two local firms compete with a more innovative foreign firm. Equilibrium R&D expenditures and profits of the competing firms are compared for different levels of: market technology, technological gaps and IP protection. The proposed model shows clearly that a stringent enforcement of IP agreements will dramatically decrease the innovative abilities of developing economies especially in high technological sectors. The maintain and increase of their R&D skills will not be possible without a reduction of their technological gap and strong incentives to initiate regulatory (or permit tacit) R&D cooperation between local firms.

Keywords: Development; Imitation; Innovation; Intellectual Property; R&D; TRIPs.

PubMed Disclaimer

Figures

Fig. 1
Fig. 1
Comparison of profits of LDC and DC firms in the case of complete spillovers: (δ,β) = (1,1)
Fig. 2
Fig. 2
Comparison of R&D expenses of LDC and DC firms in the case of complete spillovers: (δ,β) = (1,1)
Fig. 3
Fig. 3
Comparison of profits of LDC and DC firms in the case of no intra spillovers: (δ,β) = (1,0)
Fig. 4
Fig. 4
Comparison of R&D expenses of LDC and DC firms in the case of no intra spillovers: (δ,β) = (1,0)
Fig. 5
Fig. 5
Comparison of profits of LDC and DC firms in the case of complete intra spillovers: (δ,β) = (0,1)
Fig. 6
Fig. 6
Comparison of R&D expenses of LDC and DC firms in the case of no inter spillovers: (δ,β) = (0,1)
Fig. 7
Fig. 7
Comparison of profits of LDC and DC firms in the case of no spillovers: (δ,β) = (0,0)
Fig. 8
Fig. 8
Comparison of R&D expenses with and without local R&D cooperation after TRIPs adoption (left: LDC firms, right: DC firm)
Fig. 9
Fig. 9
Comparison of profits of LDC and DC firms in the case of TRIPs adoption and local R&D cooperation
Fig. 10
Fig. 10
Comparison of R&D expenses of LDC firms before and after TRIPs adoption
See this image and copyright information in PMC

References

    1. Aldieri L, Sena V, Vinci C. Domestic r&d spillovers and absorptive capacity: some evidence for US, Europe and Japan. International Journal of Production Economics. 2018;198:38–49. doi: 10.1016/j.ijpe.2018.01.015. - DOI
    1. Amir R. Modelling imperfectly appropriable R&D via spillovers. International Journal of Industrial Organization. 2000;18:1013–1032. doi: 10.1016/S0167-7187(00)00071-0. - DOI
    1. Arrow, K. 1962. The Rate and Direction of Innovative Activity, ed. Richard R. Nelson. Princeton University Press, chap Economic welfare and the allocation of resources for invention
    1. Bouet E. A study of intellectual property protection policies and innovation in the Indian pharmaceutical industry and beyond. Technovation. 2015;38:31–41. doi: 10.1016/j.technovation.2014.10.007. - DOI
    1. Campi M, Dueñas M. Intellectual property rights, trade agreements, and international trade. Research Policy. 2019;48(3):531–545. doi: 10.1016/j.respol.2018.09.011. - DOI

LinkOut - more resources