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Intellectual Property Rights, Multinational Firms and Technology Transfers

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  • Sara Biancini
  • Pamela Bombarda

    (Université de Cergy-Pontoise, THEMA)

Abstract

Intellectual property rights (IPR) protect firms from imitation and are considered crucial to promote innovation and technological diffusion. This paper examines the im- pact of IPR on import sourcing decisions of multinationals. We consider a framework in which multinational firms offshore production of an intermediate good in a developing country. Firms can either decide to import the intermediate from vertically integrated producers, or from independent suppliers. In both cases, offshoring part of the produc- tion process embodies a risk of imitation. The model predicts that, under reasonable assumptions, stronger IPR encourage by a larger extent the imports of intermediates through vertical integration. Using U.S. Related-Party Trade database, we find empiri- cal evidence supportive of the positive link between level of IPR and the relative share of imports from vertically integrated manufacturers.

Suggested Citation

  • Sara Biancini & Pamela Bombarda, 2017. "Intellectual Property Rights, Multinational Firms and Technology Transfers," THEMA Working Papers 2017-16, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    • Handle: RePEc:ema:worpap:2017-16
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    Cited by:

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    Keywords

    Intellectual Property Rights; MNF; FDI; outsourcing; international trade.;
    All these keywords.

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation

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