Intellectual property rights,product complexity and the organization of multinational firms

This paper studies how the intellectual property right (IPR) regime in destination countries influences the decision of firms between procurement from related parties and from independent suppliers while the latter may involve technology sharing or not. Using firm‐level data on the mode choice for each transaction and a new product complexity measure, results confirm that firms are generally reluctant to source complex goods from outside firm boundaries. However, when technology is shared, IPRs promote outsourcing of more complex goods whereas without technology sharing, IPRs promote outsourcing of less complex products that are prone to reverse engineering and simpler to imitate.     

Can corruption encourage clean technology transfer?

We study the impact of environmental regulation on the transfer of a clean technology where bureaucrats are needed for government intervention. In the absence of corruption, when environmental taxes are low, a technology transfer always takes place and it increases total outputs, but may lead to higher pollution levels. However, when corruption is possible, a firm with a dirty technology may choose to bribe a corruptible bureaucrat who will underreport the actual level of emissions, thereby hindering the transfer of clean technology. We show that a less strict anticorruption policy may lead to more bribing, but encourage technology transfers. Moreover, an environment-oriented government would set a deterrent environmental tax to reduce pollution, while an output-oriented government would set a minimum tax rate to eliminate corruption and induce technology transfers. However, a balanced government would tolerate corruption when the cost of bribing is low and the clean technology is sufficiently efficient.     

Intertemporal Emission Permits Trading Under Uncertainty and Irreversibility

This paper analyzes the effect of emission permit banking on clean technology investment and abatement under conditions where the stringency of the future cap is uncertain. We examine the problem of heterogeneous firms minimizing the cost of intertemporal emission control in the presence of stochastic future pollution standards and emission permits that are tradable across firms and through time. A firm can invest in clean capital (an improved pollution abatement technology) to reduce its abatement cost. We consider two possibilities: that investment is reversible or irreversible. Uncertainty is captured within a two period model: only the current period cap is known. We show that if banking is positive and marginal abatement costs are sufficiently convex, there will be more abatement and investment in clean technology under uncertainty than there would be under certainty and no banking. These results are at odds with the common belief that uncertainty on future environmental policy is a barrier to investment in clean capital. Moreover, under uncertainty and irreversibility, we find that there are cases where banking enables firms to invest more in clean capital.     

Intellectual Property Rights and Entry into a Foreign Market: FDI versus Joint Ventures

We study the effect of the intellectual property rights (IPR) regime of a host country (South) on a multinational's decision between serving a market via greenfield foreign direct investment to avoid the exposure of its technology or a North–South joint venture (JV) with a local firm, which allows R&D spillovers under imperfect IPRs. JV is the equilibrium market structure when R&D intensity is moderate and IPRs strong. The South can gain from increased IPR protection because it encourages a JV, whereas policies to limit foreign ownership in a JV gain importance in technology‐intensive industries as complementary policies to strong IPRs.     

Private patent protection in the theory of Schumpeterian growth

We develop a Schumpeterian growth model with privately optimal intellectual property rights (IPRs) enforcement and investigate the implications for intellectual property and R&D policies. In our setting, successful innovators undertake costly rent protection activities (RPAs) to enforce their patents. RPAs deter innovators who seek to discover higher quality products and thereby replace the patent holder. RPAs also deter imitators who seek to capture a portion of the monopoly market by imitating the patent holder's product. We investigate the role of private IPR protection by considering the impact of subsidies to RPAs on economic growth and welfare. We find that a larger RPA subsidy raises the innovation rate if and only if the ease of imitation is above a certain level. With regards to welfare, we find that depending on the parameters it may be optimal to tax or subsidize RPAs. Thus a prohibitively high taxation of RPAs is not necessarily optimal. We also show that the presence of imitation strengthens the case for subsidizing R&D.     

Modes of Foreign Direct Investment and Intellectual Property Rights Protection: Wholly‐owned or Joint Venture? Firm‐level Evidence from Taiwanese Multinational Manufacturing Enterprises

This paper finds evidence from Taiwanese manufacturing multinational enterprises (MNEs) for the period 2003–2005 to show that Taiwanese manufacturing MNEs are more likely to choose joint ventures (JVs) if intellectual property rights (IPRs) protection in the foreign direct investment (FDI) host country is strong. The estimation results suggest that if a country with an IPR strength similar to the level of Chile increases its IPR protection to the strength of Taiwan, the probability of forming JVs in that country will increase by 13.8%. One policy implication of this study is that developing countries can stimulate local participation by IPR reform.     

Intellectual Property Rights and Economic Growth

Interest in links between protection of intellectual property and growth has been revived by developments in new growth theory and by the WTO’s TRIPS Agreement. The relationship between the strength of a country’s intellectual property rights (IPRs) regime and rate of growth is ambiguous from a theoretical standpoint, reflecting the variety of channels through which technology can be acquired and their differing importance at different stages of development. We investigate the impact of IPR protection on economic growth in a panel of 79 countries using threshold regression analysis. We show that whilst the effect of IPR protection on growth depends upon the level of development, it is positively and significantly related to growth for low‐ and high‐income countries, but not for middle‐income countries. This suggests that, although IPR protection encourages innovation in high‐income countries, and technology flows to low‐income countries, middle‐income countries may have offsetting losses from reduced scope for imitation.     

Eco-Labeling and Horizontal Product Differentiation

This paper investigates the impact of eco-labels on the abatement of emissions in a market with horizontal product differentiation. A distinction is made between an end-of-pipe abatement method and a clean technology approach. In the former case underinvestment is likely to occur even if the marginal willingness to pay for abatement of consumers is equal to the social marginal benefit of abatement. The level of abatement depends on the number of firms and on the number of consumers. For a large market with few firms overinvestment in abatement is also possible. Clean technology abatement achieves a first best level regardless of market size if all consumers have a marginal willingness to pay for abatement equal to its social benefit.     

Coordination of sectoral climate policies and life cycle emissions

Drastically reducing greenhouse gas emissions involves numerous specific actions in each sector of the economy. The costs and abatement potential of these measures are interdependent because of sectoral linkages. For instance, the carbon footprint of electric vehicles depends on the electricity mix. This issue has received large attention in the literature on Life Cycle Assessments (LCA). This paper analyzes how life cycle considerations should be integrated into policy design. We model a partial equilibrium with two vertically connected sectors, an upstream (e.g. electricity) and a downstream (e.g. transportation) one. In each sector, a dirty and a clean technology are available. The clean downstream technology consumes the upstream good and may thus shift emissions to the upstream sector. Our main contribution is to detail how optimal subsidies on clean technologies should incorporate life cycle emissions when carbon pricing is limited. The optimal downstream subsidy should be corrected for all external costs generated in the upstream sector, not only unpriced pollution but also the fiscal externality due to the subsidy to the clean upstream technology. We also analyze the joint optimization of upstream and downstream policies. The upstream subsidy should not incorporate features of the downstream sector, whereas the downstream optimal subsidy depends upon the upstream sector characteristics. All results are illustrated using a calibrated example of the electrification of passenger cars.     

经济结构、技术进步与环境污染——基于中国工业行业数据的分析

文章将环境污染的影响分解为规模效应、结构效应、纯生产技术效应、纯污染治理技术效应、混合技术效应、结构生产技术效应、结构治理技术效应和综合效应,并运用37个工业行业2001-2009年三种主要废气排放数据实证分析了工业经济结构和技术进步对工业废气减排的贡献,得到如下结论:纯生产技术效应、纯污染治理技术效应在减排过程中占据了主导地位;工业经济结构的变化对工业废气减排的作用效果不明显,相对2001年甚至还加剧了环境污染;结构生产技术效应和结构治理技术效应都对废气减排起到了促进作用,环境技术进步在一定程度上弥补了工业结构的不合理。     

Optimal Timing of CCS Policies with Heterogeneous Energy Consumption Sectors

Using the Chakravorty et al. (J Econ Dyn Control 30:2875–2904, 2006) ceiling model, we characterize the optimal consumption paths of three energy resources: dirty oil, which is non-renewable and carbon emitting; clean oil, which is also non-renewable but carbon-free thanks to an abatement technology, and solar energy, which is renewable and carbon-free. The resulting energy-mix can supply the energy needs of two sectors. These sectors differ in the additional abatement cost they have to pay for consuming clean rather than dirty oil, as Sector 1 (industry) can abate its emissions at a lower cost than Sector 2 (transport). We show that it is optimal to begin by fully capturing Sector 1’s emissions before the ceiling is reached. Also, there may be optimal paths along which the capture devices of both sectors must be activated. In this case, Sector’s 1 emissions are fully abated first, before Sector 2 abates partially. Finally, we discuss the way heterogeneity of abatement costs causes sectoral energy price paths to differ.     

Optimal dynamic environmental policies of a profit maximizing firm

In this paper we study the optimal environmental policy of the firm for different scenarios dependent on (costs of) production technologies, financing costs, and governmental policy. The governmental instruments to be considered are:

Locational Stratification by Environment

This paper develops an equilibrium sorting model wherein perfectly mobile agents decide their optimal residential locations, either in a clean city or in a dirty city where production takes place. While residents in a dirty city suffer a higher level of pollution, they incur less commuting cost when going to work. When workers of different abilities choose different locations in which to reside, a segregated spatial configuration emerges, where those residing in a clean city have higher working time, human capital, and income than those in the dirty city. Analytic comparative‐static and numerical welfare analyses are performed.     

Imitation and innovation driven development under imperfect intellectual property rights

Developing countries employ about two-fifth of the world's researchers, originate one quarter of world expenditures on R&D, and their inventions are subject to imitation. Nevertheless, the previous literature focuses on North–South setups in which the South is restricted to imitating northern inventions. To analyze the effects of IPR policies on developed and developing countries, we extend this literature to allow not only for southern innovation and imitation of northern goods, but also for imitation targeted at southern innovations. We find the effects of IPRs on R&D and welfare to be non-monotonic and dependent on innovation efficiency and an innovation threshold in the South. For sufficiently strong IPRs the South engages in original R&D and stronger IPRs promote southern innovation, welfare, and a reduction in the North–South wage gap. Below the threshold, a strengthening of IPR protection fails to promote innovation and decreases welfare. Stronger IPRs exclusively for southern firms can benefit both regions by shifting southern resources from the imitation of northern goods to original southern innovation.     

Pollution havens: international empirical evidence using a shadow price measure of climate policy stringency

Given the ambiguous empirical results of previous research, this paper tests whether support for a climate policy-induced pollution haven effect and the pollution haven hypothesis can be found. Unlike the majority of previous studies, the analysis is based on international panel data and includes several methodological novelties: By arguing that trade flows of dirty goods to less dirty sectors may also be influenced by changes in policy stringency, trade information on primary, secondary, and tertiary sectors are included. In order to clearly differentiate between dirty sectors and sectors with high pollution abatement costs, separate measures for pollution intensity and policy stringency are implemented. For the former, two intensities, namely the sectors’ carbon dioxide emission intensity and the emission relevant energy intensity, are used to identify dirty sectors. For the latter, an internationally comparable, sector-specific measure of climate policy stringency is derived by applying a shadow price approach. Potential endogeneity between climate policy stringency, trade openness and the trade balance is controlled for by employing a dynamic panel generalized method of moments estimator. The results provide evidence for a pollution haven effect that is also present for non-dirty sectors, i.e., a sector’s net imports rise in general if the sector faces an increase in climate policy stringency. Moreover, a stronger pollution haven effect regarding carbon dioxide intensive and emission relevant energy-intensive sectors is revealed. However, no support for the stronger pollution haven hypothesis can be found.     

Environmental Quality,Public Debt and Economic Development

This article analyzes the consequences on capital accumulation and environmental quality of environmental policies financed by public debt. A public sector of pollution abatement is financed by a tax or by public debt. We show that if the initial capital stock is high enough, the economy monotonically converges to a long-run steady state. On the contrary, when the initial capital stock is low, the economy is relegated to an environmental poverty trap. We also explore the implications of public policies on the trap and on the long-run stable steady state. In particular, we find that government should decrease debt and increase pollution abatement to promote capital accumulation and environmental quality at the stable long-run steady state. Finally, a welfare analysis shows that there exists a level of public debt that allows a long run steady state to be optimal.     

Path dependence,self-fulfilling expectations,and carbon lock-in

Growing under the incumbent dirty regime might generate inertia against switching to a clean alternative and lead to the carbon lock-in. I analyze the economics of carbon lock-in through the lens of path dependence and self-fulfilling expectation. The incumbent dirty regime, as the first mover, accumulates an installed base of household users during early lead periods. The installed base generates an effect of path dependence that incentives upcoming households to keep on joining the incumbent dirty regime rather than switch to the clean alternative. Switching could be an expectation-driven selection outcome if expectations are formed about an expanding clean regime which outweighs the path dependence effect. Switching is a welfare-improving outcome if welfare gains by upcoming households switching to the clean regime offset welfare losses by installed-base households locked in the dirty one.     

Is trade in electrical and electronic products sensitive to IPR protection? Evidence from China’s exports

This article attempts to provide the first empirical evidence on the effect of intellectual property rights (IPRs) on China’s export of electrical and electronic products. It adopts a gravity model for unbalanced panel data of China’s 146 important trading partners over the period of 2002–2012. To eliminate the effects of FDI in determining the linkage between IPR and exports, the panel excludes the destination countries and territories that invest in China. The results reveal that the level of IPR protection in destination countries has a positive impact on China’s flow of exports. Further analysis on data disaggregated by IPR score demonstrates that a higher level of IPR protection in destination countries and territories is positively linked with China’s exports of these items in each of the IPR protection clusters and indicates a strong market power effect by the interplay between R&D expenditure and IPR in the destinations. Finally, both market power and market expansion effects are found to be prevalent in the destinations, as implied by the coefficient of IPR protection disaggregated by income level of China’s export destinations. The results generally resemble those in the literature that describe the linkage between IPR protection and trade flows.     

Intellectual property rights,technology transfer and exports in developing countries

We develop a model to analyze one mechanism under which stronger intellectual property rights (IPR) protection may improve the ability of firms in developing countries to break into export markets. A Northern firm with a superior process technology chooses either exports or technology transfer through licensing as its mode of supplying the Southern market, based on local IPR policy. Given this decision, the North and South firms engage in Cournot competition in both markets. We find that stronger IPR would enhance technology transfer through licensing and reduce the South firm's marginal production cost, thereby increasing its exports. Welfare in the South would rise (fall) if that country has high (low) absorptive capacity. Excessively strong IPR diminish competition and welfare, however. Adding foreign direct investment as an additional channel of technology transfer sustains these basic messages.