Abstract:

This paper introduces trademark infringement into a dynamic, general equilibrium setting.  Intellectual property takes two forms in the model - the knowledge of production and the reputation for quality in the trademark.  Intellectual property protection (IPP) that reduces trademark infringement tends to increase welfare but may or may not raise the innovation rate in the economy.  This form of IPP increases the measure of infringed goods if production remains in the region of innovation, but decreases infringement if foreign direct investment is possible.  By extending the baseline endogenous growth model to include trademark infringement, this paper takes an important step towards highlighting the factors of consequence for globally optimal IPP.