American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Patent Laws, Product Life-Cycle Lengths, and Multinational Activity
American Economic Review
vol. 104,
no. 7, July 2014
(pp. 1979–2013)
Abstract
Do intellectual property rights influence multinationals' manufacturing location decisions? My theoretical model indicates that countries with strong patent laws attract multinational activity, but only in sectors with relatively long product life cycles. By contrast, firms with short life-cycle technologies are insensitive, because offshore imitation is less likely to succeed before obsolescence. I document strong empirical regularities consistent with the model using a panel dataset on the global operations of US-based multinational firms and a new measure of product obsolescence. Moreover, my identification strategy allows me to isolate the causal effect of patent laws on multinational activity.Citation
Bilir, L Kamran. 2014. "Patent Laws, Product Life-Cycle Lengths, and Multinational Activity." American Economic Review, 104 (7): 1979–2013. DOI: 10.1257/aer.104.7.1979Additional Materials
JEL Classification
- D25 Intertemporal Firm Choice, Investment, Capacity, and Financing
- F23 Multinational Firms; International Business
- K11 Property Law
- L60 Industry Studies: Manufacturing: General
- O34 Intellectual Property and Intellectual Capital
- R32 Other Spatial Production and Pricing Analysis