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Abstract

Vol. 63, No. 4, pp. 333-345 (2012)

“Protection of Basic Research and R&D Incentives in an International Setting”
Reiko Aoki (Institute of Economic Research, Hitotsubashi University), Tina Kao (Australian National University)

We look at cumulative innovations and the protection of basic research which does not carry stand-alone commercial values in an international setting. Due to the complementarily of the innovations, we find that for some parameter range, technology leading countries do not always prefer the strongest protection standard. Similarly, technology lagging countries do not always prefer the weakest protection standard. Thus intellectual property rights may be an instrument to soften R&D competition in the development stage, and may be used to coordinate R&D efforts. Our model suggests that there may be fewer disputes about intellectual property right standards among countries in industries characterised by sequential innovations.