Abstract
This chapter aims to provide a critical assessment of the existing economic theories and empirics that speak to the welfare implications of IPR harmonization and to suggest how they may inform policy debate. The economics of IPR is premised on the tradeoff between dynamic efficiency and static inefficiency associated with the grant of monopoly power of IPR. Studies that exploit recent changes to the US patent system find little support for the dynamic efficiency hypothesis. Historical case studies and empirical studies show that countries, including today’s rich ones, strengthen IPR as they become richer and presumably as they acquire the ability to innovate. Projecting the dynamic efficiency vs. static inefficiency tradeoff to a global context, studies show that harmonization entail welfare loss in the South and possibly the whole world, but technology diffusion from the North to the South may accelerate in response to strengthening of IPR in the South.