Essays in International and Innovation Economics

Abstract

The first chapter of this dissertation introduces the motivation, explains the system of international patents, and then itemizes the structure of the research. As a nonmarket route of technology diffusion, international patent transfers account for an important channel of diffusion of new technologies. The aim of the dissertation is to analyze how intellectual property rights (IPR) and product complexity shape this channel of technology diffusion.

In the second chapter, I analyze how firms decide to protect their innovations. Products have different technological complexity, and patenting decisions are made under different IPR enforcement. I simulate the model to characterize the set of patenting firms in terms of their productivity, under different country-industry characteristics.

Simulations show a non-monotonicity in the use of patents. I test the

model using a subset of patents data from the European Patents Office from 2000 to 2010. The regressions confirm two hypothesis of the model: (i) international transfer of patents and technological complexity have an inverted U shape relation, and (ii) changes in IPR have a larger effect in patenting decisions when industries are located "in the middle" of the spectrum of technological complexity.

The third chapter studies how foreign IPR affects innovation, in the form of productivity improvements, in industries with different levels of technological complexity. I use simple functional forms to derive the endogenous steady state distribution of firms and their innovation growth. I simulate the model to pin down the effects of expanding intellectual property protection. Simulations show a non-monotonicity in the effects of foreign countries strengthening IPR. As technological complexity increases, domestic firms innovate more when foreign IPR increases, and hence the average productivity of these industries increases. However, as complexity approaches

to very high complex industries, this effect of stronger foreign IPR dissipates. I test these implications with an industry labor productivity measure from the STAN indicators of the OECD. Estimates support the main findings of the model.