The impact of patent protection on R&D. Evidence using export markets

Joel Blit and Mauricio Zelaya
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Mauricio Zelaya: NERA Economic Consulting

No 17010, Working Papers from University of Waterloo, Department of Economics

Abstract: We examine whether stronger patent protection promotes private sector R&D, using changes in the patent rights regime of export destination countries as a quasi-exogenous source of variation. Constructing an export-weighted index of trade partner patent rights by country-industry-year, we find that R&D responds strongly to trade partner patent rights, and this after including country-industry, country-year, and industry-year fixed effects. This relationship is present in industries where patents are an effective way to protect innovation, but not in patent insensitive industries. Our results suggest a causal link between patent rights and firm R&D investments and support the inclusion of patent rights provisions in trade agreements.

JEL-codes: O34 (search for similar items in EconPapers)
Pages: 35 pages
New Economics Papers: this item is included in nep-ipr and nep-tid
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