The standard economic model of intellectual property is an efficient property rights solution to a market failure problem of investment in a non-rival and non-excludable good. We propose an exchange theory of intellectual property based on a contracting approach in the context of market-making and enforcement of economic rights in exchange for monopoly taxation rights. We use a Hotelling (1929) type spatial model to show the relationship between location and pricing decisions of innovating firms under differing intellectual property, institutional quality, and taxation regimes.
CITATION STYLE
Davidson, S., Mohan, V., & Potts, J. (2020). Location, taxation and governments: An exchange theory of intellectual property. Journal of Economic Behavior and Organization, 169, 266–283. https://doi.org/10.1016/j.jebo.2019.11.018
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