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The Purification-Straw
Theory of IPR Protection |
Kim-Sau Chung & Chia-Hui
Lu |
Working paper |
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Chia-Hui Lu |
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Purification straw is a product
developed and sold for profit by innovators from the North, but consumed only
at the South. We develop a framework that incorporates products like this. In
our model, consumers at North and South have the same preference, but different incomes lead them to
consume different baskets. When North is richer, innovation activities shift
from low-end products to high-end ones, benefiting the well-off countries at
the South, but hurting the truly poor ones. The conventional wisdom that
South benefits more from pirating than from IPR protection is correct only
for those well-off members. The truly poor ones are better off protecting IPR
in order to encourage ¡§inventing for the other 90%¡¨. This fits the robust
empirical fact that intended IPR protection is a U-shape function of country
incomes. Northern innovators are unlikely to advocate in one
voice for stronger IPR protection in the truly poor countries, however. |