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The effect of patents on trade

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  • Palangkaraya, Alfons
  • Jensen, Paul H.
  • Webster, Elizabeth

Abstract

In contrast with quotas and tariffs, it is theoretically ambiguous whether fewer (or ‘weaker’) rules over intellectual property rights will increase or decrease trade in patentable goods. The prevailing view is that anticipation of imitation reduces exporters' incentive to export goods to jurisdictions with ‘weak’ patent regimes. This empirical paper uses new measures of how the destination-country patent system can affect trade. In contrast with existing studies which assume would-be exporters can always get a patent in the target foreign market, we construct measures of the bias against foreign patent applicants and patents which may block imported goods. We find evidence that the presence of destination-country blocking patents has the larger (negative) impact on international trade. Being refused a patent also has a negative impact on trade but the magnitude is smaller.

Suggested Citation

  • Palangkaraya, Alfons & Jensen, Paul H. & Webster, Elizabeth, 2017. "The effect of patents on trade," Journal of International Economics, Elsevier, vol. 105(C), pages 1-9.
  • Handle: RePEc:eee:inecon:v:105:y:2017:i:c:p:1-9
    DOI: 10.1016/j.jinteco.2016.12.002
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    References listed on IDEAS

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    More about this item

    Keywords

    International trade; Patents; Innovation; Imitation; Intellectual property rights;

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • F14 - International Economics - - Trade - - - Empirical Studies of Trade
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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