A Social Cost Approach to the Intellectual Property Rights Dispute between the United States and China

Abstract

The nature of the dispute over intellectual property rights (IPR) infringement between China and the United States goes beyond ordinary trade friction. The notion of Chinese infringement on intellectual products gives rise to this academic inquiry, which will use the concept of social cost in deriving a possible resolution of the dispute. This paper attempts to investigate how and by what way harmful externalities (i.e., infringement of U.S. IPR) can be internalized through price mechanisms. The first section focuses on the historical development, the process of dispute, and the immediate consequences, including the fundamental arguments. and both sides’ short-term solution; hence, it indicates the need for seeking a workable long-term solution. The second section deals with the rationale and the logic of using social cost analysis in this specific dispute. The final section puts forward policy implications and suggestions to the Chinese government, in light of international standards and understanding the nature of market economy. The IPR dispute between China and the United States could allow China to learn more about a market economy’s underlying principles rather than self-indulgently going on its own way of market socialism. If China wants to be accepted as part of world society, it must accommodate with capitalism’s ingredients and codes of conduct.