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Tariffs and Technology Transfer through an Intermediate Product

  • Eiji Horiuchi
  • Jota Ishikawa

We examine the relationship between tariffs and North-South technology transfer in an oligopoly model when technology is embodied in a key component that only North firms can produce. They may have an incentive to transfer their technologies to South firms even if the South's licensing market is restricted or if intellectual property right protection is imperfect in the South. Interestingly, a decrease in the tariff on the final good as well as an increase may induce technology transfer. Our analysis suggests that the South should implement pro-competitive policies to induce technology transfer and enhance welfare. Copyright 2009 The Authors. Journal compilation 2009 Blackwell Publishing Ltd.

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Article provided by Wiley Blackwell in its journal Review of International Economics.

Volume (Year): 17 (2009)
Issue (Month): SI (05)
Pages: 310-326

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Handle: RePEc:bla:reviec:v:17:y:2009:i:si:p:310-326
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  1. Jota Ishikawa & Barbara J. Spencer, 1996. "Rent-Shifting Export Subsidies with an Imported Intermediate Product," NBER Working Papers 5458, National Bureau of Economic Research, Inc.
  2. Mukesh Eswaran, 1994. "Licensees as Entry Barriers," Canadian Journal of Economics, Canadian Economics Association, vol. 27(3), pages 673-88, August.
  3. James R. Markusen, 2004. "Multinational Firms and the Theory of International Trade," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262633078, June.
  4. Katharine E. Rockett, 1990. "Choosing the Competition and Patent Licensing," RAND Journal of Economics, The RAND Corporation, vol. 21(1), pages 161-171, Spring.
  5. Mukherjee, Arijit & Pennings, Enrico, 2006. "Tariffs, licensing and market structure," European Economic Review, Elsevier, vol. 50(7), pages 1699-1707, October.
  6. Davies, Howard, 1977. "Technology Transfer through Commercial Transactions," Journal of Industrial Economics, Wiley Blackwell, vol. 26(2), pages 161-75, December.
  7. Kamien, Morton I & Tauman, Yair, 2002. "Patent Licensing: The Inside Story," Manchester School, University of Manchester, vol. 70(1), pages 7-15, January.
  8. Kabiraj, Tarun & Marjit, Sugata, 2003. "Protecting consumers through protection: The role of tariff-induced technology transfer," European Economic Review, Elsevier, vol. 47(1), pages 113-124, February.
  9. Ping Lin & Kamal Saggi, 1999. "Incentives for Foreign Direct Investment under Imitation," Canadian Journal of Economics, Canadian Economics Association, vol. 32(5), pages 1275-1298, November.
  10. Wang, X. Henry, 1998. "Fee versus royalty licensing in a Cournot duopoly model," Economics Letters, Elsevier, vol. 60(1), pages 55-62, July.
  11. Pack, Howard & Saggi, Kamal, 2001. "Vertical technology transfer via international outsourcing," Journal of Development Economics, Elsevier, vol. 65(2), pages 389-415, August.
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