Endogenous Research and Development and Intellectual Property Laws in Developed and Emerging Economies

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The incentive of providing protection of intellectual property has been analyzed both for an emerging economy and for a developed economy. The optimal patent length and the optimal patent breadth within a country are found to be positively related to each other for a fixed structure of laws abroad. Moreover, a country can respond to stronger patent protection abroad by weakening its patent protection under certain circumstances and by strengthening its patent protection under other circumstances. These results depend on the curvature of the research-and-development production function. Finally, we investigate the impact of an increase in the willingness to pay in the emerging economy and find conditions under which there is an improvement in both patent length and patent breadth in the emerging economy.