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Patent protection, imitation and the mode of technology transfer

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  • Fosfuri, Andrea
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    Abstract

    This paper analyzes a model in which a fir endowed with a new technology can choose between exports, licensing and direct investment as entry modes in a foreign market. I endogenize the vintage of the transferred technology and allow for imitation by the licensee. Subsidiary production and exports circumvent imitation but involve higher costs for the innovating firm The fir can strategically use the vintage of the technology to deter imitation by the licensee. As a result, transfers to affiliate might be of later vintage than technologies sold to outsiders. Through modificatio of the imitation costs, the host country’s system of patent protection influence the mode of technology transfers which in turn affects the welfare of the recipient economy.

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    File URL: http://e-archivo.uc3m.es/bitstream/10016/13420/1/patent_fosfuri_IJIO_2000_ps.pdf
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    Bibliographic Info

    Paper provided by Universidad Carlos III de Madrid in its series Open Access publications from Universidad Carlos III de Madrid with number info:hdl:10016/13420.

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    Length: 1151 p.
    Date of creation: Oct 2000
    Date of revision:
    Publication status: Published in International Journal of Industrial Organization (2000-10) v.v. 18, p.1129-1149
    Handle: RePEc:ner:carlos:info:hdl:10016/13420

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    Web page: http://www.uc3m.es

    Related research

    Keywords: International technology transfers; Imitation; Patent protection;

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    References

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    1. Lee, Jeong-Yeon & Mansfield, Edwin, 1996. "Intellectual Property Protection and U.S. Foreign Direct Investment," The Review of Economics and Statistics, MIT Press, vol. 78(2), pages 181-86, May.
    2. Ethier, W.J. & Markusen, J.R., 1993. "Multinational Firms, Technology Diffusion and Trade," ISER Discussion Paper 0303, Institute of Social and Economic Research, Osaka University.
    3. Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716.
    4. Budd, Christopher & Harris, Christopher & Vickers, John, 1993. "A Model of the Evolution of Duopoly: Does the Asymmetry between Firms Tend to Increase or Decrease?," Review of Economic Studies, Wiley Blackwell, vol. 60(3), pages 543-73, July.
    5. Mansfield, Edwin & Schwartz, Mark & Wagner, Samuel, 1981. "Imitation Costs and Patents: An Empirical Study," Economic Journal, Royal Economic Society, vol. 91(364), pages 907-18, December.
    6. Blomström, Magnus & Kokko, Ari, 1996. "Multinational Corporations and Spillovers," CEPR Discussion Papers 1365, C.E.P.R. Discussion Papers.
    7. Ignatius J. Horstmann & James R. Markusen, 1995. "Exploring New Markets: Direct Investment, Contractual Relations and the Multinational Enterprise," NBER Working Papers 5029, National Bureau of Economic Research, Inc.
    8. Vishwasrao, Sharmila, 1994. "Intellectual property rights and the mode of technology transfer," Journal of Development Economics, Elsevier, vol. 44(2), pages 381-402, August.
    9. Helpman, Elhanan, 1993. "Innovation, Imitation, and Intellectual Property Rights," Econometrica, Econometric Society, vol. 61(6), pages 1247-80, November.
    10. Rockett, Katharine, 1990. "The quality of licensed technology," International Journal of Industrial Organization, Elsevier, vol. 8(4), pages 559-574, December.
    11. Nancy T. Gallini, 1992. "Patent Policy and Costly Imitation," RAND Journal of Economics, The RAND Corporation, vol. 23(1), pages 52-63, Spring.
    12. James R. Markusen, 1995. "The Boundaries of Multinational Enterprises and the Theory of International Trade," Journal of Economic Perspectives, American Economic Association, vol. 9(2), pages 169-189, Spring.
    13. Wright, Donald J., 1993. "International technology transfer with an information asymmetry and endogenous research and development," Journal of International Economics, Elsevier, vol. 35(1-2), pages 47-67, August.
    14. Carmen Matutes & Pierre Regibeau & Katharine Rockett, 1996. "Optimal Patent Design and the Diffusion of Innovations," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 60-83, Spring.
    15. Gould, David M. & Gruben, William C., 1996. "The role of intellectual property rights in economic growth," Journal of Development Economics, Elsevier, vol. 48(2), pages 323-350, March.
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    Citations

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    Cited by:
    1. Tom Karkinsky & Nadine Riedel, 2009. "Corporate Taxation and the Choice of Patent Location within Multinational Firms," Working Papers 0931, Oxford University Centre for Business Taxation.
    2. Straub, Stéphane, 2008. "Opportunism, Corruption, and the Multinational Firm’s Mode of Entry," Open Access publications from University of Toulouse 1 Capitole http://neeo.univ-tlse1.fr, University of Toulouse 1 Capitole.
    3. Veugelers, Reinhilde & Cassiman, Bruno, 2004. "Foreign subsidiaries as a channel of international technology diffusion: Some direct firm level evidence from Belgium," European Economic Review, Elsevier, vol. 48(2), pages 455-476, April.
    4. Anja, Breitwieser & Neil, Foster, 2012. "Intellectual property rights, innovation and technology transfer: a survey," MPRA Paper 36094, University Library of Munich, Germany.
    5. Maria Pluvia ZUNIGA & Emmanuel COMBE, 2002. "Introducing Patent Protection In The Pharmaceutical Sector:," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 16, pages 191-221.
    6. repec:hal:journl:halshs-00193398 is not listed on IDEAS
    7. Valeria Gattai, 2009. "Firm’s intangible assets and multinational activity: full versus shared ownership," Working Papers 154, University of Milano-Bicocca, Department of Economics, revised Feb 2009.
    8. Fosfuri, Andrea, 2004. "Determinants of international activity: evidence from the chemical processing industry," Research Policy, Elsevier, vol. 33(10), pages 1599-1614, December.
    9. Tom Karkinsky & Nadine Riedel, 2009. "Corporate Taxation and the Choice of Patent Location within Multinational Firms," CESifo Working Paper Series 2879, CESifo Group Munich.
    10. Dischinger, Matthias & Riedel, Nadine, 2011. "Corporate taxes and the location of intangible assets within multinational firms," Journal of Public Economics, Elsevier, vol. 95(7), pages 691-707.
    11. Uday Bhanu Sinha, 2001. "Patent Protection, Innovation Rate and Welfare," Departmental Working Papers wp0106, National University of Singapore, Department of Economics.
    12. Valeria Gattai, 2006. "A Tale of Three Countries: Italian, Spanish and Swiss Manufacturing Operations in China," Working Papers 2006.150, Fondazione Eni Enrico Mattei.
    13. Lorenzo Casaburi & Valeria Gattai, 2009. "Why FDI? An Empirical Assessment Based on Contractual Incompleteness and Dissipation of Intangible Assets," Working Papers 164, University of Milano-Bicocca, Department of Economics, revised Jul 2009.
    14. Valeria Gattai, 2006. "From the Theory of the Firm to FDI and Internalisation: A Survey," Giornale degli Economisti, GDE (Giornale degli Economisti e Annali di Economia), Bocconi University, vol. 65(2), pages 225-262, November.
    15. Fosfuri, Andrea, 2004. "Determinants of international activity: evidence from the chemical processing industry," Open Access publications from Universidad Carlos III de Madrid info:hdl:10016/13188, Universidad Carlos III de Madrid.
    16. Arijit Mukherjee & Chiranjib Neogi, . "Vertical technology transfer and the implications of patent protection," Discussion Papers 09/05, University of Nottingham, School of Economics.

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