Entry, reputation and intellectual property rights enforcement

Jiahua Che, Larry Qiu and Wen Zhou

Canadian Journal of Economics, 2014, vol. 47, issue 4, 1256-1281

Abstract: We examine how reputation concerns induce a multinational to partly withhold its entry into a developing country under weak intellectual property rights (IPR) enforcement. Equilibrium IPR violations are shown to arise only in the presence of such concerns. Holding constant a multinational's incentive to innovate, better IPR enforcement encourages entry but reduces social welfare. The multinational's incentive to innovate may be inversely Ushaped in the strength of IPR enforcement. If timed properly, however, stronger IPR enforcement can foster innovation without compromising social welfare. Testable implications concerning observable IPR violations are derived.

JEL-codes: D82 F10 F12 F23 (search for similar items in EconPapers)
Date: 2014
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