Cross-border intellectual property rights: Contract enforcement and absorptive capacity

This article studies the cross-border protection of intellectual property rights (IPR) as an outcome of a contract obtained through a Nash bargaining process between an innovative North and an imitative South. The level of disclosure required in such contract is higher, the more capable is the South in copying if bargaining breaks down. This raises questions about the suitability of universal IPR standards through a single contract. The threat of a penalty in case of non-compliance can, however, reduce the outside option of more advanced countries and make a stricter IPR regime enforceable by harmonizing their interests with relatively less developed nations.