This paper examines the growth effects of intellectual property right (IPR) protection in a quality-ladder model of endogenous growth. Stronger IPR protection, which reduces the imitation probability, increases the reward for innovation. However, stronger protection also gradually reduces the number of competitive sectors, in which innovation is easier than in monopolistic sectors. With free entry to R&D, the number of researchers in each remaining competitive sector increases, but the concentration of R&D activity raises the possibility of unnecessary duplication of innovation, thereby hindering growth. Consequently, imperfect rather than perfect protection maximizes growth. Welfare and scale effects are also examined.

Using an endogenous growth model with physical and human capital accumulation, this paper considers the sustainability of economic growth when the use of a polluting input (e.g., fossil fuels) intensifies the risk of capital destruction through natural disasters. We find that growth is sustainable only if the tax rate on the polluting input increases over time. The long-term rate of economic growth follows an inverted V-shaped curve relative to the growth rate of the environmental tax, and it is maximized by the least aggressive tax policy of those that asymptotically eliminate the use of polluting inputs. Unavailability of insurance can accelerate or decelerate the growth-maximizing speed of the tax increase depending on the relative significance of the risk premium and precautionary savings effects. Welfare is maximized under a milder environmental tax policy, especially when the pollutants accumulate gradually.

intellectual property rights, endogenous growth, quality ladder, imitation, leapfrogging, duplication, O31, O34, O41,