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Working Paper
What Drives International technology Diffusion? A Gravity Approach
We derive a theory-based gravity-type equation that determines the main drivers of international technology diffusion under perfect enforcement of intellectual property rights. We estimate the gravity equation using bilateral royalty payments data for a sample of 53 countries and the period 1995-2012 to infer the amount of technology diffusion predicted by the model. We then analyze differences between the model and the data, and find that they are mainly driven by characteristics of the importing-technology country that are not captured by the model. We explore the role of three channels: ...
Working Paper
International Technology Licensing, Intellectual Property Rights, and Tax Havens
This paper investigates the determinants of international technology licensing using data for 50 countries during 1996-2012. A multi-country model of innovation and international technology licensing yields a dynamic structural gravity equation for royalty payments as a function of fundamentals, including imperfect intellectual property protection and differences in corporate taxation. The gravity equation is estimated with nonlinear methods. The model's fundamentals account for about 60% of the variation in royalty payments. A quantitative analysis sheds light on the impact of global ...
Briefing
Goodfriend Memorial Lecture: Knowledge Creation and Diffusion
On May 11, 2023, Hugo Hopenhayn delivered the inaugural Marvin Goodfriend Memorial Lecture with a presentation of his paper "Knowledge Creation and Diffusion with Limited Appropriation," which was co-authored with Liyan Shi. The paper highlights how intellectual property rights must trade off incentives for innovation and knowledge diffusion and considers the optimal assignment of property rights as a Ramsey problem in a dynamic model where knowledge diffusion takes place under random matching. Hopenhayn is a professor of economics at UCLA, a Guggenheim Fellow and a long-term Richmond Fed ...
Working Paper
International Technology Licensing, Intellectual Property Rights, and Tax Havens
This paper investigates the determinants of international technology licensing using data for 50 countries during 1996-2012. A multi-country model of innovation and international technology licensing yields a dynamic structural gravity equation for royalty payments as a function of fundamentals, including imperfect intellectual property protection and differences in corporate taxation. The gravity equation is estimated with nonlinear methods. The model's fundamentals account for about 60% of the variation in royalty payments. A quantitative analysis sheds light on the impact of global ...
Working Paper
Dynamic Gains from Trade Agreements with Intellectual Property Provisions
I study the short- and long-term effects of trade agreements with strict intellectual property (IP) provisions on innovation, growth and welfare. I develop a quantitative multi-country trade model with endogenous productivity through innovation and adoption that features imperfect IP rights enforcement. A counterfactual analysis shows that improving IP protection in exchange for market access increases welfare, innovation and growth in the world. However, welfare gains along the transition accrue differently across countries. While developed countries benefit both in the short- and inthe ...
Working Paper
Dynamic Gains from Trade Agreements with Intellectual Property Provisions
I develop a quantitative theory of bilateral trade agreements with intellectual property (IP) provisions in a multi-country growth model. The model’s dynamics are driven by innovation and technology licensing. Imperfect IP enforcement leads to reduced royalty payments and growth. Governments negotiate tariffs and IP enforcement through Nash bargaining. Gains from the trade agreement vary along the transition. Developing countries experience short-term losses, while developed countries gain in both the short and long run. A government with short-term goals may reduce losses but at the cost ...
Working Paper
Intellectual Property, Tariffs, and International Trade Dynamics
The emergence of global value chains not only leads to a magnification of trade in intermediate inputs but also to an extensive technology diffusion among the different production units involved in arms-length relationships. In this context, the lack of enforcement of intellectual property rights has recently become a highly controversial subject of debate in the context of the China-U.S. trade negotiations. This paper analyzes the strategic interaction of tariff policies and the enforcement of intellectual property rights within a quantitative general equilibrium framework. Results indicate ...
Working Paper
International Technology Licensing, Intellectual Property Rights, and Tax Havens
This paper investigates the determinants of international technology licensing using data for 41 countries during 1996-2012. A multi-country model of innovation and international technology licensing yields a dynamic structural gravity equation for royalty payments as a function of fundamentals, including: (i) imperfect intellectual property protection and (ii) tax havens. The gravity equation is estimated using nonlinear methods. The model’s fundamentals account for 56% of the variation in royalty payments. Counterfactual analysis sheds light on the role of intellectual property rights ...
Intellectual Property Rights Have Become A Key Part of Trade Deals
Developed countries typically require strong IPR provisions to limit imitation and technology leakages in developing economies.
Working Paper
International technology Diffusion: A Gravity Approach
This paper investigates, empirically, the determinants of international technology diffusion. To do that, I set up a multi-country model of innovation and diffusion with perfect enforcement of intellectual property rights (IPR). The model yields a gravity equation for bilateral royalty payments that is estimated using methods from empirical trade. I investigate discrepancies between model’s predictions and observed royalty payments to identify the role of fundamentals vs. other factors such as imperfect IPR protection. Fundamentals account for most of the variation in royalty payments, ...