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Intellectual property rights, multinational firms and technology transfers

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  • Biancini, Sara
  • Bombarda, Pamela

Abstract

Intellectual Property Rights (IPR) protect firms from imitation and are considered crucial to promoting innovation and technological diffusion. This paper examines the impact of IPR on import-sourcing decisions of multinational firms. We consider a framework in which firms offshore production of an intermediate good to another country. Firms can decide either to import the intermediate good from vertically integrated producers, or from independent suppliers. In both cases, offshoring part of the production process embodies a risk of imitation. The model predicts that, under reasonable parameter restrictions, stronger IPR disproportionately encourages the imports of intermediate goods through vertical integration. Using the US Related-Party Trade database, we find empirical evidence supportive of the positive link between level of IPR and the share of imports from vertically integrated manufacturers.

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  • Biancini, Sara & Bombarda, Pamela, 2021. "Intellectual property rights, multinational firms and technology transfers," Journal of Economic Behavior & Organization, Elsevier, vol. 185(C), pages 191-210.
    • Handle: RePEc:eee:jeborg:v:185:y:2021:i:c:p:191-210
    DOI: 10.1016/j.jebo.2021.02.005
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    Cited by:

    1. Claudia Canals & Michael A. Klein & Fuat Şener, 2023. "Intellectual property‐related preferential trade agreements and US offshoring to developing countries," Review of International Economics, Wiley Blackwell, vol. 31(4), pages 1442-1475, September.

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    More about this item

    Keywords

    Intellectual property rights; Multinational firms; Vertical integration; Outsourcing; International trade;
    All these keywords.

    JEL classification:

    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • 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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