We construct a model of dynamic endogenous product innovation and international trade, using it to calculate the welfare effects of lower intellectual property rights (IPR) protection in the non-innovating South than in the innovating North. We find that it is generally in the North’s interest...

The theoretical consensus supporting free trade has been challenged in the 1980s by new developments in trade theory stressing imperfect competition and/or increasing returns to scale (IRS). It has been found that the exercise of trade policy to protect an IRS industry may benefit an economy,...