ABSTRACT
This chapter addresses the benefits and costs of both the protection and the no-protection solutions. The main point is that if one considers the long-run benefits for economic growth resulting from intellectual property protection, as well as the long-run costs in terms of economic stagnation when no protection exists, the case for strengthening intellectual property protection in developed and developing countries is very strong. Creating new types of output in such areas as biotechnology, computer software, and information transmission, not considered in intellectual property protection mechanisms, means that maintaining a degree of protection requires flexibility in the mechanism itself. The impact of intellectual property protection on the firm's decision to allocate resources to research and development (R&D) is clearly at the core of any discussion regarding an optimal intellectual property policy. From the firm's perspective, the degree of protection afforded intellectual property has an impact on its profits and therefore on the amount of money that it invests in R&D.
