Climate Policy and Endogenous Intellectual Property Rights Enforcement in a North-South Model

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Abstract
How will climate change affect intellectual property rights (IPR) enforcement and what does this imply for unilaterally optimal climate policy? I develop a North-South model with carbon taxation and endogenous innovation in a clean and a dirty sector, in which both countries enforce IPR endogenously. I find that (1) in the presence of climate damages, domestic IPR enforcement can be both a strategic substitute and a complement to foreign enforcement, (2) climate change may have a significant influence on the evolution of IPR protection, lowering the regions’ willingness to enforce patents except if innovation in the clean sector is much more productive than in the dirty sector, (3) endogenous IPR protection may imply substantially higher optimal carbon taxation than under a fixed regime, especially when tax policy is unilateral and (4) environmental tax policy may increase the gains from international cooperation on IPR enforcement. Single authored paper.