International licensing and quality‐enhancing technology spillover in a product cycle model

Po‐yang Yu, Hamid Beladi, Hsun Chu and Ching‐chong Lai

Economic Inquiry, 2025, vol. 63, issue 2, 608-635

Abstract: This paper examines the effects of an international quality‐enhancing technology spillover on the international industry distribution and innovation in a dynamic North‐South model. When a Southern firm receives a technology transfer from the North through international licensing, the technology spills over to other Southern firms by enhancing the quality of their products. We find that a stronger spillover effect depresses both Northern innovative R&D and Southern adaptive R&D, and thus is welfare‐impairing both for the advanced country and recipient country. The results cast doubt on the common view that regards the technology spillover as a positive externality.

Date: 2025
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https://doi.org/10.1111/ecin.13271

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Persistent link: https://EconPapers.repec.org/RePEc:bla:ecinqu:v:63:y:2025:i:2:p:608-635

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