Horizontal inventive step and international protection of intellectual property

This paper studies the intellectual property protection in a global setting where the protection is based on the patentability requirement. When two countries with similar research efficiencies open trade with each other, the world patentability requirement will rise above the autarky levels of both countries. When two countries with sufficiently different research efficiencies open trade with each other, they will both lower their patentability requirements from their respective autarky levels. The model shows that there is under-protection for patents in the second case, which suggests that these countries may want to strengthen their coordination in patentability requirement.