Patent Laws, Product Life-Cycle Lengths, and Multinational Activity
AbstractDo intellectual property rights influence multinationals' manufacturing location decisions? My theoretical model indicates that countries with strong patent laws attract multinational activity, but only in sectors with relatively long product life cycles. By contrast, firms with short life-cycle technologies are insensitive, because offshore imitation is less likely to succeed before obsolescence. I document strong empirical regularities consistent with the model using a panel dataset on the global operations of US-based multinational firms and a new measure of product obsolescence. Moreover, my identification strategy allows me to isolate the causal effect of patent laws on multinational activity.
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Bibliographic InfoArticle provided by American Economic Association in its journal American Economic Review.
Volume (Year): 104 (2014)
Issue (Month): 7 (July)
Find related papers by JEL classification:
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
- F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
- K11 - Law and Economics - - Basic Areas of Law - - - Property Law
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- O34 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital
- R32 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other Spatial Production and Pricing Analysis
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- Canals, Claudia & Şener, Fuat, 2014. "Offshoring and intellectual property rights reform," Journal of Development Economics, Elsevier, vol. 108(C), pages 17-31.
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