Entry, reputation and intellectual property rights enforcement. (11th February 2015)

• Record Type: Journal Article
• Authors: Che, Jiahua; Qiu, Larry; Zhou, Wen
• Is Part Of: Canadian journal of economics. Volume 47:Number 4(2014:Nov.)
• Page Start: 1256
• Page End: 1281
• Publication Date: 2015-02-11
• Subjects: Economics -- Periodicals; 330
• DOI: 10.1111/caje.12104
• Languages: English
• ISSNs: 0008-4085

Abstract

<abstract abstract-type="main"> <title>Abstract</title> <p>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 U‐shaped 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.</p> </abstract>