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This paper develops a North–South trade model with heterogeneous labour and horizontally differentiated products, and compares the implications of two policies: Southern intellectual property rights (IPR) and Northern immigration policy, with the latter aiming to attract Southern talent as a means of pre-empting imitation. Individuals self-select into becoming entrepreneurs and innovate (imitate) in the North (South). The likelihood of imitation depends on product quality, imitator's talent and IPR strength. Several interrelated channels of competition are identified. Allowing high-talent migration when IPR protection in the South is weak shifts imitation to low-quality products and innovation to high-quality products. The outcome is in stark contrast to the policy of strengthening Southern IPR, which limits low-talent imitation in the South and encourages low-quality innovation in the North. Migration also increases the income of low-talent entrepreneurs, as well as the average quality of products imitated by high-talent entrepreneurs in the South. Global income rises with migration, but is not guaranteed to rise with stronger Southern IPR.
Bibliographical noteWe thank the editor and three anonymous referees as well as participants in seminars at Kyiv School of Economics (2019), Kobe University (2019) and Kyoto University (2019), and at the International Conference on ‘Time zones, offshoring, economic growth and dynamics’ (Kobe, 2019), Asia Pacific Trade Seminars (Tokyo, 2019), and Workshop on ‘Migration, globalization and the knowledge economy’ (Utrecht, 2019).
Ivus acknowledges financial support from the Social Sciences and Humanities Research Council of Canada (SSHRC) Insight Grant ‘Intellectual property rights, innovator migration and technology diffusion’, and Qiu acknowledges financial support from Hong Kong SAR Government's RGC Competitive Earmarked Research Grant 2017-2020, no. HKU 17502217.
Ivus acknowledges financial support from the Social Sciences and Humanities Research Council of Canada (SSHRC) Insight Grant ‘Intellectual property rights, innovator migration and technology diffusion’, and Qiu acknowledges financial support from Hong Kong SAR Government's RGC Competitive Earmarked Research Grant 2017‐2020, no. HKU 17502217.
© 2022 London School of Economics and Political Science.
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- 1 Finished
QIU, D. L., IVUS, O. & NAGHAVI, A.
1/11/17 → 30/04/21
Project: Grant Research