Monday, May 29th 2017 – 13:00 – 14:00
Maison des Sciences Économiques, Room 19
Maison des Sciences Économiques, 106-112 bd de l’Hôpital, 75013 Paris, Métro 5 Campo Formio, bus 57, 67, 27, 83 ou 47
with Pamela Bombarda (ThEMA, Université de Cergy-Pontoise)
Abstract – We consider a framework in which firms based in the North offshore production of an intermediate good in the South. Firms can decide to import the intermediate from vertically integrated producers, or to outsource to independent contractors using a licensing contract based on a Northern blueprint. The developing country is characterized by incomplete contracts and an imitation risk related to weak IPR enforcement. Our model shows that, under reasonable assumptions on model parameters, a reinforcement of intellectual property rights (IPR) in the South can increase the relative share of imports from vertically integrated suppliers. Using the U.S. Related-Party Trade database from Antras (2015), we find empirical evidence supportive of our key prediction.