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Patent Laws, Product Life-Cycle Lengths, and Multinational Activity

  • L. Kamran Bilir
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    Do 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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    Article provided by American Economic Association in its journal American Economic Review.

    Volume (Year): 104 (2014)
    Issue (Month): 7 (July)
    Pages: 1979-2013

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    Handle: RePEc:aea:aecrev:v:104:y:2014:i:7:p:1979-2013
    Note: DOI: 10.1257/aer.104.7.1979
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    21. L. Kamran Bilir, 2014. "Patent Laws, Product Life-Cycle Lengths, and Multinational Activity," American Economic Review, American Economic Association, vol. 104(7), pages 1979-2013, July.
    22. Branstetter, Lee G. & Fisman, Raymond & Foley, C. Fritz, 2004. "Do stronger intellectual property rights increase international technology transfer? Empirical evidence from U.S. firm-level panel data," Policy Research Working Paper Series 3305, The World Bank.
    23. Aditi Mehta & Marc Rysman & Tim Simcoe, 2010. "Identifying the age profile of patent citations: new estimates of knowledge diffusion," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 25(7), pages 1179-1204, November/.
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