No abstract

This paper models the determination of the defence industrial base - the number of different military systems a country decides to maintain. High R&D costs means that few countries can afford to produce major weapons systems and the producers also import systems. Non-producers rely on imports and we assume their demand is driven by regional arms races. Military capability is determined by the number of systems and the quantity and quality of each. We examine how the defence industrial base is influenced by military expenditures, R&D costs, export controls, the nature of regional arms races and a variety of other factors.Defence industrial base, Military procurement, Market structure, Arms trade, Arms races,

We consider a policy game between a high-income country hosting a drug innovator and a low-income country hosting a drug imitator. The low-income country chooses whether to enforce an International Patent Regime (strict IPR) or not (weak IPR) and the high-income country chooses whether to allow parallel imports (PI) of on-patent drugs or market based discrimination (MBD). We show that, for a moderately high imitation cost, both (Strict IPR, PI) and (Weak IPR, MBD) emerge as the Subgame Perfect Nash Equilibrium (SPNE) policy choices. For relatively smaller imitation costs, (Weak IPR, MBD) is the unique SPNE policy choice. The welfare properties reveal that although innovation may be higher at the (Strict IPR, PI) policy regime, the market coverage and national welfare of the low-income country, and the total welfare are all lower. This opens up the efficiency issue of implementing TRIPS and at the same time allowing international exhaustion of patent rights. JEL ClassiÞcation: D4, L1, I1. Keywords: Income Inequality; Intellectual Property Rights; India; TRIPS; Parallel Imports; Pharmaceuticals; * We would like to acknowledge Þnancial support from the British Academy Grant number SG-50473 and the University of Kent Small Faculty Grants. We thank Kaushik Basu, Sugato Bhattacharyya, Javier Coto, Jagjit Chadha, Martin Jensen, Sugata Marjit, Indrajit Ray, Mathan Satchi and seminar participants at University of Birmingham, University of Kent, Centre for Studies in Social Sciences, Kolkata and Imperial College for their comments and suggestions on an earlier version of the paper. We would also like to thank two anonymous referees for their helpful suggestions. The usual disclaimer applies, however.

We study the impact of income redistribution on the decisions of a health care innovator and the utility of individuals. We Þnd that income redistribution from rich to poor can increase the quality of medical innovation and the utility of some consumers whose income is reduced through the redistribution. We therefore Þnd a non-altruistic motive for a income transfers that would increase access to health innovations.JEL ClassiÞcation: D4, L1, I1.

This paper shows that regardless of any intra-country income differences, parallel imports result in a lower level of health-care innovation but, contrary to popular as well as conventional theoretical wisdom, a lower price in the Third World compared to market-based discrimination. Despite such a lower price, however, parallel imports unambiguously make all buyers in the Third World worse off when intra-country income disparity exists. On the other hand, even discarding the MNC's profit, there will be cases in which the richer country prefers price discrimination as well. That is, in those cases, no countries will have any incentive under the welfare criterion to undo price discrimination, contrary to Richardson (2002).