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Intellectual Property Protection and Patterns of Trade

  • Jade Vichyanond

    (Princeton University)

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    The paper provides a simple theoretical model for understanding how the difference in the level of intellectual property rights protection determines trade patterns. In particular, I examine how countries ?levels of patent rights protection affect exports in industries with different degrees of reliance on innovation. In contrast to most models of institutional comparative advantage, which predict that countries with superior institutions specialize in industries that are very dependent on institutions, I show that higher patent rights protection does not necessarily lead to specialization in industries that rely heavily on innovation. There may exist a threshold beyond which occurs a reversal of specialization patterns, a consequence of monopoly power inherent in intellectual property rights protection. I then use the model?s implications to assess empirically whether such predicted patterns hold in cross-country trade data and fi?nd evidence for general patterns of specialization as well as a reversal of such patterns among countries with high levels of patent rights protection.

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    File URL: http://www.princeton.edu/ceps/workingpapers/197vichyanond.pdf
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    Paper provided by Princeton University, Department of Economics, Center for Economic Policy Studies. in its series Working Papers with number 1201.

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    Date of creation: Nov 2009
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    Handle: RePEc:pri:cepsud:197vichyanond
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    1. Durlauf, S.M. & Johnson, P.A., 1995. "Multiple Regimes and Cross-Country Growth Behavior," Working papers 9419r, Wisconsin Madison - Social Systems.
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    12. Branstetter, Lee G. & Fisman, Raymond & Foley, C. Fritz, 2004. "Do stronger intellectual property rights increase international technology transfer? Empirical evidence from U.S. firm-level panel data," Policy Research Working Paper Series 3305, The World Bank.
    13. Andrei A. Levchenko, 2007. "Institutional Quality and International Trade," Review of Economic Studies, Oxford University Press, vol. 74(3), pages 791-819.
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    16. Manova, Kalina, 2008. "Credit constraints, equity market liberalizations and international trade," Journal of International Economics, Elsevier, vol. 76(1), pages 33-47, September.
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