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International licensing and quality‐enhancing technology spillover in a product cycle model

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  • Po‐yang Yu
  • Hamid Beladi
  • Hsun Chu
  • Ching‐chong Lai

Abstract

This paper examines the effects of an international quality‐enhancing technology spillover on the international industry distribution and innovation in a dynamic North‐South model. When a Southern firm receives a technology transfer from the North through international licensing, the technology spills over to other Southern firms by enhancing the quality of their products. We find that a stronger spillover effect depresses both Northern innovative R&D and Southern adaptive R&D, and thus is welfare‐impairing both for the advanced country and recipient country. The results cast doubt on the common view that regards the technology spillover as a positive externality.

Suggested Citation

  • Po‐yang Yu & Hamid Beladi & Hsun Chu & Ching‐chong Lai, 2025. "International licensing and quality‐enhancing technology spillover in a product cycle model," Economic Inquiry, Western Economic Association International, vol. 63(2), pages 608-635, April.
    • Handle: RePEc:bla:ecinqu:v:63:y:2025:i:2:p:608-635
    DOI: 10.1111/ecin.13271
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