The strongPolitical Economystrong of Intellectual Property Treaties.pdfVIP

JLEO, V20 N2 415 The Political Economy of Intellectual Property Treaties Suzanne Scotchmer University of California and NBER Intellectual property treaties create two types of obligations: for national treat- ment of foreign inventors and for certain harmonized protections. I investigate both the incentive to join such treaties and the incentive to harmonize. As compared to an equilibrium in which the countries’ policy makers make independent choices, harmonization will generally strengthen protections. This analysis recognizes that public sponsorship is sometimes an efficient alternative to intellectual property. However, there are no institutions to harmonize public spending, and there are no international mechanisms to repatriate the spillovers it generates. As a consequence, there may be too little public sponsorship and too much intellectual property. A country’s inclination to strengthen harmonized protections will depend both on its innovativeness (positively) and on the size of its domestic market (negatively). 1. Introduction The economic rationale for intellectual property (IP) is that it encourages development of new products, and thus generates consumers’ surplus. The net profit that accrues to inventors is also a social benefit, since it is a transfer from consumers. However, profit is recognized as a necessary evil, since the flip side of profit is deadweight loss. There is no economic ratio- nale for protecting inventors per se. This reasoning gets subverted in the international arena. To a trade policy negotiator, profit earned abroad is unambiguously a good thing, and the consumers’ surplus con