Would global patent protection be too weak without international coordination?∗

Would global patent protection be too weak without international coordination? Would it be too strong with the international coordination mandated by the TRIPS agreement (Agreement on Trade-Related Aspects of Intellectual Property Rights)? I try to answer these questions using a model of patent-setting game between governments. I introduce firm-biased government preferences and trade barriers, and then make use of the estimates of the firm-bias parameter from the political economy literature to proxy for the degree of governments’ firm-bias. Then I calculate the range of trade barriers that is sufficient to give rise to under-protection of patents in the global system without international policy coordination in intellectual property rights (IPR) protection. I make the judgment that the true trade barrier between countries very likely falls within this range of under-protection. Therefore, I conclude that there probably would be underprotection of patent rights without international policy coordination. Calibrating the model with data on market sizes and patent counts, I find that requiring all countries to harmonize their patent standards with the equilibrium standard of the most innovative country quite likely leads to global over-protection of patent rights. Therefore, it is quite likely that global patent protection is too strong if TRIPS is fully enforced.