We develop a model to analyze one mechanism under which stronger intellectual property rights (IPR) protection may improve the ability of firms in developing countries to break into export markets. A Northern firm with a superior process technology chooses either exports or technology transfer through licensing as its mode of supplying the Southern market, based on local IPR policy. Given this decision, the North and South firms engage in Cournot competition in both markets. We find that stronger IPR would enhance technology transfer through licensing and reduce the South firm’s marginal production cost, thereby increasing its exports. Welfare in the South would rise (fall) if that country has high (low) absorptive capacity. Excessively strong IPR diminish competition and welfare, however. Adding foreign direct investment as an additional channel of technology transfer sustains these basic messages.
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Paper provided by CESifo Group Munich in its series CESifo Working Paper Series with number
CESifo Working Paper No. 2464.
Find related papers by JEL classification: F14 - International Economics - - Trade - - - Country and Industry Studies of Trade L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets O10 - Economic Development, Technological Change, and Growth - - Economic Development - - - General O34 - Economic Development, Technological Change, and Growth - - Technological Change - - - Intellectual Property Rights
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
Taylor, M Scott, 1994.
"TRIPs, Trade, and Growth,"
International Economic Review,
Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 35(2), pages 361-81, May.
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