Intellectual property rights, taxation, and firms’ innovation: theory and evidence from China

Rongxin Xu (), Yibai Yang and Zhijie Zheng
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Rongxin Xu: University of Macau

Journal of Economics, 2024, vol. 142, issue 1, No 3, 109 pages

Abstract: Abstract This study develops an R &D-based growth model with corporate taxation to explore the heterogeneous effects of intellectual property rights (IPR) protection on innovation of firms with different tax rates. Our theoretical analysis shows that strengthening IPR stimulates innovation, and a higher tax rate dampens the positive effect of IPR. To account for the interactive effect between IPR and taxation, we find supportive evidence for the theoretical result using firm-level data in China. Moreover, our empirical analysis shows that strengthening IPR is associated with less innovation by high-tax firms and more innovation by low-tax firms.

Keywords: Intellectual property rights; Taxation; Innovation; Economic growth (search for similar items in EconPapers)
JEL-codes: E62 H20 O30 O31 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:kap:jeczfn:v:142:y:2024:i:1:d:10.1007_s00712-023-00853-8

DOI: 10.1007/s00712-023-00853-8

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