Economic Rationale for National Treatment in Intellectual Property Protection When Countries Have Different Innovation Technologies

Abstract

ABSTRACT National treatment (NT), a practice of governments granting the same patent protection to all inventors regardless of their national origin, is a main feature of international agreements on intellectual property rights (IPRs). In this study, we examine the economic rationale for NT in international IPR agreements. By comparing the equilibrium of a noncooperative patent policy game under a non-NT regime and that under an NT regime, we find that NT in IPR protection reduces global welfare when countries have different innovation-generating technologies. We suggest that a role of NT may be to enhance fairness among countries.