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IZA
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Are Intellectual Property Rights Unfair?
by
Gilles Saint-Paul
(November 2002)
published in: Labour Economics, 2004, 11 (1), 129-144
Abstract:
If redistribution is distortionary, and if the income of skilled workers is due to knowledgeintensive
activities and depends positively on intellectual property, a social planner which
cares about income distribution may in principle want to use a reduction in Intellectual
Property Rights (IPRs) rather than redistributive transfers. On the one hand, such a reduction
reduces statis inefficiency. On the other hand, standard redistribution also reduces the level
of R and D because it distorts occupational choice. We study this possibility in the context of
a model with horizontal innovation, where the government, in addition to taxes and transfers,
controls the fraction of innovations that are granted patents. The model predicts that standard
redistribution always dominates limitations to IPRs.
Text: See Discussion Paper No. 639 
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