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Journal of Economic Theory and Econometrics
JETEM/계량경제학보/計量經濟學報/JKES
Journal of the Korean Econometric Society

Macroeconomic Dynamics of Endogenous Intellectual Property

Vol.17, No.3, September , 41–77


English Version |  Korean Version
  •   (Kyung Hee University)

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Abstract  

This paper concerns the macroeconomic performance of innovation policies and intellectual property rights in a simple dynamic general equilibrium model. Innovation policies affect the provision of common and private property. Common property protects public knowledge in public domain so as to increase the total factor productivity and to disseminating new knowledge while securing private intellectual property incurs the costs of private resources to secure rewards for its right holders. This paper examines the short-run and long-run properties of labor allocation and capital accumulation with both exogenous and endogenous provision of common and private property. This paper shows an inverted U-shape relation between innovation policies and economic growth. This is the combination of the positive effect of public knowledge by public innovation policy and the negative effect of both its cost for tax distortion and labor allocation for securing intellectual property. The transitional dynamic path with exogenous innovation policies and intellectual property rights is unique and converges immediately to the unique stationary equilibrium. On the other hand, when innovation policies and intellectual property rights are endogenous, there are an infinite number of transitional paths that occurs in conjunction with the unique stationary equilibrium. The coordination failure between the policymaker and private agents is responsible for indeterminate transitional dynamics. Indeterminacy implies that innovation policies for common property can explain differences in the short-run growth rates and long-run income distributions among countries. Since the stationary equilibrium with endogenous property rights is absolutely stable, income differences are persistent in growing economies.


Keywords
   Knowledge in Public Domain, Innovation Policy, Ramsey Optimum, Indeterminacy

JEL classification codes
   E62, H40, O31
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