“Intellectual Property Rights, Price, and Access to Innovation: Evidence from TRIPS” by Margaret K. Kyle
Margaret K. Kyle
Toulouse School of Economics
Tae Jung Yoon
Intellectual property rights require a tradeoff between long-run incentives for innovation and short-run access to innovation, i.e. between dynamic and static efficiency. The 1995 TRIPS Agreement raised many concerns about this balance for developing countries, particularly for pharmaceuticals. The existence of intellectual property rights (IPRs) may make a market more attractive for innovators, leading to country-specific investments in marketing and distribution. Such investments may result in quicker launch of new products and greater availability. However, the market power granted by IPRs allows innovators to charge higher prices, potentially reducing access to new products. We examine the consequences of pharmaceutical patents on the speed of drug launch, price, and quantity in 61 countries from 1996-2011.