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SPECIAL INTEREST POLITICS AND INTELLECTUAL PROPERTY RIGHTS: AN ECONOMIC ANALYSIS OF STRENGTHENING PATENT PROTECTION IN THE PHARMACEUTICAL INDUSTRY
Author(s) -
CHU ANGUS C.
Publication year - 2008
Publication title -
economics and politics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.822
H-Index - 45
eISSN - 1468-0343
pISSN - 0954-1985
DOI - 10.1111/j.1468-0343.2007.00328.x
Subject(s) - monopolistic competition , intellectual property , politics , welfare , social welfare , public economics , pharmaceutical industry , distortion (music) , quality (philosophy) , economics , industrial organization , business , property rights , law and economics , market economy , microeconomics , law , political science , engineering , medicine , amplifier , philosophy , cmos , epistemology , electronic engineering , pharmacology , monopoly
Since the 1980s, the pharmaceutical industry has benefited substantially from a series of policy changes that have strengthened the patent protection for brand‐name drugs as a result of the industry's political influence. This paper incorporates special interest politics into a quality‐ladder model to analyze the policy‐makers' tradeoff between the socially optimal patent length and campaign contributions. The welfare analysis suggests that the presence of a pharmaceutical lobby distorting patent protection is socially undesirable in a closed‐economy setting but may improve social welfare in a multi‐country setting, which features an additional efficiency tradeoff between monopolistic distortion and international free riding on innovations.