## Intellectual Property Rights and International R&D Competition

_IMF Working Papers, June 1, 2001_

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## Bibliographic details
- Authors: Stefania Scandizzo
- Published: June 1, 2001
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451850369.001

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### Overview
- Examines a country's incentives for intellectual property rights (IPR) protection in a global trading environment.
- Identifies a time inconsistency problem intrinsic to IPR protection: ex ante strong protection is warranted to promote innovation, but once discovery takes place there is an incentive to lower protection.
- Finds that the sub optimal but time consistent policy involves an insufficient level of protection and, therefore, of innovation.
- Notes differences across countries: in more technologically advanced economies reputational considerations may be sufficient to maintain strong protection; otherwise commitment mechanisms may be required.

### Key findings
- Time inconsistency: ex ante vs ex post incentives create a divergence between socially optimal IPR protection and time-consistent policy.
- Consequence: insufficient IPR protection under a time-consistent policy leads to insufficient innovation.
- Role of technological advancement: more technologically advanced economies can rely on reputational considerations to sustain strong IPR protection.
- Alternatives when reputation is insufficient:
  - Participation in the World Trade Organization as a commitment mechanism.
  - More controversially, some form of bilateral punishment.

### Policy recommendations and mechanisms
- Strengthen commitment to IPR protection through international arrangements:
  - Participation in the World Trade Organization.
  - Consideration (with caution) of bilateral punishment mechanisms to deter ex post erosion of IPR protection.
- Rely on reputational incentives in technologically advanced economies where feasible.
- Recognize that without credible commitment mechanisms, domestic policy will tend toward suboptimal IPR protection and reduced innovation.

### Subjects and keywords highlighted in the paper
- Subjects: Competition, Consumption, Economic sectors, Financial markets, Foreign corporations, Income, National accounts, Personal income, Tax incentives, Technology
- Keywords: commitment IPR Policy, Competition, consumer surplus, Consumption, Foreign corporations, Global, home government, imitation, Income, innovation, Intellectual property rights, IPR policy, IPR protection, IPR regime, monopoly profits, time inconsistency, WP

*Stefania Scandizzo. "Intellectual Property Rights and International R&D Competition", IMF Working Papers 2001, 081 (2001), accessed 9/17/2026, https://doi.org/10.5089/9781451850369.001*

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/30/intellectual-property-rights-and-international-r-d-competition-15146_