Working Paper: CEPR ID: DP6460
Authors: Bernard Hoekman; Kamal Saggi
Abstract: Using a repeated game approach, this paper models a North-South trade agreement under which North offers South improved market access (via a tariff reduction) if South agrees to prevent local imitation by strengthening its protection of intellectual property rights (IPRs). We show that such an agreement arises in equilibrium if South's imitative capacity is neither too high nor too low. The paper also considers a scenario where Southern protection of IPRs is induced via a North-South transfer. A comparison of the two instruments shows that one instrument does not unambiguously dominate the other in terms of sustaining cooperation. We also analyze whether and how the availability of the second instrument affects cooperation given that one instrument is already available.
Keywords: Intellectual Property Rights; International Cooperation; Market Access; Tariffs; Trade Agreements; Transfers
JEL Codes: F12; F13; L41; O19
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Stronger IPR protection in the South (O34) | Improved market access by the North through tariff reductions (F15) |
| North's tariff policies (F13) | Level of IPR protection in the South (O34) |
| Efficiency of imitation (C59) | Level of IPR protection in the South (O34) |
| Transfer from North to South (R49) | IPR protection in the South (O34) |
| Tariffs and transfers (F16) | Cooperation in North-South agreements (F55) |