سیاست های تجاری استراتژیک، حفاظت از حقوق مالکیت معنوی و تجارت شمال و جنوب

In this paper, we analyze the issue of optimal tariffs when the Northern and Southern firms compete in quantities in an imperfectly competitive Northern market and there are potentially varying degrees of intellectual property rights (IPR) violation by the South. IPR violation is reflected through the leakage of technological knowledge (“spillovers”) from the Northern to the Southern firm creating unit cost reduction. It is shown that optimal tariffs in this framework are always higher than in the simple duopoly model since they serve here not only as profit shifting devices but also as instruments that influence domestic innovative activity, generate scale economies and countervail the IPR violation of the South. The other notable difference from the standard duopoly model is that positive tariffs may be desirable from the world welfare point of view.

The appearance of strategic trade theory represented a challenge to the prevailing concept of free trade and suggested a possible new paradigm in international trade. One of its main messages was that it is, in general, socially beneficial for a government to intervene by tariff, subsidy, quotas, etc. in order to secure higher profits for its domestic firms. Despite its theoretical attractiveness and tempting conclusion, “strategic trade policy” arguments have not convinced the majority of trade economists that the profession's traditional support for free trade should be abandoned. To a large extent, this reaction reflected the a priori bias of trade economists against trade activism, rather than being the implication of rigorous analysis (see, for instance, Krugman, 1987; Bhagwatti, 1989; Grossman and Maggi, 1998). Their intuition may have been right in general, since some results, based on “calibration” models, indicate that indeed the gains are at best modest when strategic trade policies are applied as profit shifting or facilitating devices (see Venables, 1994). However, in the particular case where free trade leads to the unilateral violations of intellectual property rights (IPR), losses may be large due to the well known appropriability problem.1 Moreover, lack of appropriability may result in lower output that does not fully utilize scale economies (see Krugman, 1984 for a discussion of scale economies in the international trade context). The Uruguay round of the GATT negotiations and several recent cases where trade sanctions have been imposed suggest that the issue of (trade-related) IPR violation and its prevention is especially critical in North–South trade. For instance, the European Community suspended Generalized System of Preferences benefits for Korean products in 1987 as a response to Korean violations of IPR. A year later, the United States imposed a 100% (punitive) tariff against some Brazilian goods (see Braga, 1990). In 1995, the US threatened China with a similar 100% (punitive) tariff on exports to the US in response to IPR violations. From the academic point of view, the importance of IPR protection in the North–South relationship has already made its way into economic encyclopedias.2 The theoretical literature in this area focuses mainly on the social welfare consequences of different levels of IPR protection, including, for example, conditions under which the South benefits in welfare terms from protecting IPR, the welfare consequences for the North if the South fails to protect IPR, optimal IPR protection from a world welfare point of view, and the level of conflict between North and South (Chin and Grossman, 1990; Diwan and Rodrik, 1991; Deardorff, 1992; Helpman, 1993; Vishwasrao, 1994; Žigić, 1996aŽigić, 1998a). The empirical literature, on the other hand, has concentrated mostly on measurable considerations such as the impact of IPR protection on the type, structure and volume of Northern foreign direct investment in the South (Ferrantino, 1993; Mansfield, 1994), the role of IPR protection as a part of the international policy mix (Ferrantino, 1993), and the impact of IPR protection on economic growth (Gould and Gruben, 1996). This paper aims to show that the distinctive role of strategic trade policy in the specific case when IPR violation prevails is not as a profit shifting or facilitating device but rather as a specific policy instrument that may help overcome appropriability problems. More specifically, we combine the strategic trade approach with the issue of IPR protection in order to explore the role of tariffs as instruments influencing IPR protection, innovative activity and trade patterns. In other words, by demonstrating that tariffs can promote innovation and attenuate or eliminate the illegal appropriation of research and development (R&D) output, this paper provides an alternative rationale for the policy recommendations put forward in the strategic trade literature. IPR violations are assumed to be closely related to “R&D spillovers”, defined as the leakage of important pieces of technical information, which can be used by the recipient at zero or small marginal costs. The channels through which spillovers take place have been well documented (see, for instance, Mansfield, 1985; Mansfield et al., 1981; Levin et al., 1987; Neven and Siotis, 1996). This information may come from common suppliers of inputs and customers, reverse engineering, hiring of employees from innovating firms, informal communications networks among engineers and scientists, industrial espionage and technological sourcing, publications and technical meetings, patent disclosure, conversations with the employees of innovating firms, etc. As Mansfield (1985) pointed out, this intelligence-gathering process varies considerably from industry to industry. Bayoumi et al. (1996) stress the importance of international trade as a major transmission mechanism by means of which spillovers take place. They refer to “mutual interdependence across countries” manifested in the usage of common intermediate goods, consumer and capital goods, technology transfer and learning as a source of important technical information. R&D spillovers in general (and in the context of international trade in particular) have two components or, in other words, are subject to two restrictions: technological and IPR restrictions. Thus, even when it is rather easy to gain relevant information about new products and processes (that is, when technological restriction is “not binding”), there is the question of whether these pieces of information could be legally exploited by recipients. This is where the issue of IPR comes into play. Namely, the government has the discretion to determine how easy it will be “to invent around a patent”, just what the scope of a patent will be, how easy it will be to copy trademarks, whether the country complies with the Berne and Paris conventions, or not, etc. The interaction of tariffs and IPR protection in the North–South trade relationship is modeled by relying on the concept of strategic interaction. The market of interest is the Northern market since the real world examples of trade sanctions such as those presented above indicate the existence of products which the South exports to the Northern market where violations of IPR by the South have taken place.3 Moreover, numerous US firms have cited huge losses in sales incurred in their domestic (that is, the US) market due to the inadequate foreign protection of intellectual property.4 The “Northern” market is assumed to be important for the Southern exporter either because it is big, or because the North has enough power to seriously constrain or even prevent the Southern firm selling the goods in question on the world market (or some “third market”).5 Finally, we assume that the IPR in the Northern market is strict so that other domestic firms are not allowed to imitate the innovating firm, which is therefore fully protected by its patent. We consider a sequential (four-stage) game. In the first stage, the Southern government selects a level of IPR protection taking into account the impact on the subsequent choice of tariff (and the choice of all other strategic variables). In the second stage, the Northern government selects the tariff, taking into account the ensuing R&D investment choice by its firm and subsequent competition in quantities. In the third stage, the Northern firm chooses its R&D investment taking into account the spillovers and following competition in quantities. Finally, in the fourth stage, the firms select quantities, and consequently, profits and welfare are realized. Analytically, the model is related to the “R&D with spillovers” types of models.6 The underlying idea is that the “spillovers parameter”, β, measures the strength of IPR protection. Thus, we assume that by setting a loose IPR regime the Southern government stimulates imitation and thus enhances spillovers and vice versa. Looser IPR would imply higher spillovers so that the intensity of spillovers is then interpreted as reflecting the strength of IPR protection. An alternative interpretation not exploited here is that the technological restrictions are always non-binding so that relevant information can be obtained relatively easily but the available information can be used legally by the Southern firm only up to the level of the strength of IPR protection. The new insights the analysis provides can be summarized as follows. (a) The impact of tariffs on the innovative activity of the Northern firm hinges crucially on the prevailing market form. If, for instance, duopoly is the outcome of the game, then the tariff serves as a technological policy instrument to restore the incentive for investing in socially desirable R&D. (b) Depending on the prevailing market structure, tariffs reduce or completely eliminate illegally appropriated research output and thus thwart IPR violations by the South. (c) Despite the fact that the level of IPR protection is assumed to be under the full control of the Southern government, duopoly is a viable market form only if the efficiency of innovative activity is sufficiently “small”. That is, beyond a given innovative efficiency threshold, a welfare maximizing Northern government will prefer to impose a prohibitive tariff that forces the Southern firm to leave the market regardless of the level of IPR protection. (d) Due to its impact on innovative activity, a positive tariff may be optimal even from the world welfare point of view. A few testable predictions also arise from the model: First, given that the Southern government sets the IPR for all industries under the same conditions, we should observe higher tariff levels on products for which the production process (or the product) is subject to higher spillovers.7 Second, the innovating firm (firms where scale economies are important) faced with spillovers but without tariff (or any other effective IPR) protection will operate at a lower scale in comparison to firms where there is effective IPR protection. The remainder of the paper proceeds as follows. Section 2states and discusses the assumptions of the game between the Northern and the Southern firms, develops the core duopoly model, and discusses the role of tariffs in it. Section 3is devoted to the solution of the third and fourth stages of the game and to comparative statics concerning the impact of tariffs on the relevant economic variables in both the duopoly and constrained monopoly outcomes. This analysis is a prerequisite for the subsequent analysis of optimal tariffs and the optimal IPR protection level examined in 4 and 5, respectively. Section 6is devoted to world welfare considerations while Section 7contains concluding remarks.

In this paper, we have examined the functions of tariffs in the situation when there are IPR violations. Besides their traditional role as a device to shift foreign profit to the domestic treasury and domestic profit, tariffs in these circumstances have an additional role as an instrument that reduces IPR violations and, therefore, stimulates the domestic firm to invest in socially beneficial R&D that in turn leads to better exploitation of the scale economies. In this setup, optimal tariffs are higher than in the standard duopoly model without R&D investment and IPR violations.37 Since the appropriation of R&D output by the South is a form of informal technology transfer, it is not a priori clear that the world planner should discourage it. The world planner would have to weigh carefully the benefits of innovation diffusion and the costs of diminished incentives and decreased R&D investment in the North. Such considerations will urge a zero or low tariff if R&D efficiency is low (see Fig. 3), but it will require a prohibitive (tp or tm) tariff if R&D efficiency is high. As is well known, the optimal design of strategic trade policy is sensitive to the type of market competition (see Spencer, 1986). Bertrand competition will not be so useful here since we concentrated on duopoly as the core model. A moment of reflection tells us that in our setup the domestic market will be completely covered by a domestic producer who charges a price equal to the unit cost of the foreign firm, that is, p*=α−β(gx)+t, provided that pm≥p* where pm stands for the monopoly price. Thus, the resulting market form will be a constrained monopoly (or the unconstrained one if pm≤p*). As shown in Žigić, 1998b, the crucial comparative static result — the impact of tariff on the R&D expenditures — is qualitatively the same under either quantity or price competition in the case of a constrained monopoly. The optimal tariff is however, lower in the Bertrand case since the competition is tougher and there are, in general, fewer distortions to correct. An interesting extension of our model would allow for the announcement of a strategic trade policy to precede the actual intervention. This would imply changes in the moves in the game and as a consequence the government would leave itself open to strategic manipulation by its own firm (see, for instance, Grossman and Maggi, 1998). The domestic firm may want to engage in costly and possibly welfare reducing signalling in order to seek rents from the government. For instance, it may be profitable for the domestic firm with low R&D efficiency to pretend that it is of the high R&D efficiency type. The welfare implications of these issues, in particular whether free trade may reemerge as the optimal solution for a certain range of parameters in this setup, seem to be an interesting topic for future research.