Wednesday, July 31, 2019

The (Anti-)Competitive Effect of Intellectual Property Rights

Michael R. Peneder, Austrian Institute of Economic Research (WIFO), Mark Thompson, Austrian Institute of Technology, and Martin Woerter, Swiss Federal Institute of Technology Zurich (ETH) - Swiss Institute for Business Cycle Research (KOF) suggest The (Anti-)Competitive Effect of Intellectual Property Rights.

ABSTRACT: We test whether intellectual property rights foster or hinder innovation by estimating IV structural equations for a large sample of Swiss firms. We find that better appropriability conditions at the industry level raise the number of competitors. However, conditional on the given industry structure, individual firms face fewer competitors, if they actually use intellectual property rights. The further impact of fewer competitors is to raise R&D, when initial competition is strong, but to reduce it, when initial competition is weak ("inverted U").

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