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Preservation Of Trade Secrets And Multinational Wage Premia

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  • DAN BERNHARDT
  • VLADIMIR DVORACEK

Abstract

This paper considers the strategic behavior of a multinational firm with superior technology operating in a developing country. Domestic firms do not have access to the superior technology other than by hiring away multinational corporation (MNC) workers. The MNC can retain its workers by paying a wage premia, and we determine how the industry structure and the nature of strategic competition between firms affects the MNC’s incentive to pay this premia and thus preserve its informational advantage. We characterize conditions under which MNCs inefficiently divide job tasks in order to raise the cost to domestic firms of acquiring the MNC’s trade secrets. (JEL F23, J31, O33)

Suggested Citation

  • Dan Bernhardt & Vladimir Dvoracek, 2009. "Preservation Of Trade Secrets And Multinational Wage Premia," Economic Inquiry, Western Economic Association International, vol. 47(4), pages 726-738, October.
    • Handle: RePEc:bla:ecinqu:v:47:y:2009:i:4:p:726-738
    DOI: 10.1111/j.1465-7295.2008.00142.x
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    References listed on IDEAS

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    Cited by:

    1. Klein, Michael A., 2022. "Patents, trade secrets and international technology transfer," Economics Letters, Elsevier, vol. 210(C).
    2. Klein, Michael A., 2023. "Trade secret protection, multinational firms and international trade," International Economics, Elsevier, vol. 173(C), pages 325-342.
    3. Bar, Talia & Kalinowski, Jesse, 2019. "Patent validity and the timing of settlements," International Journal of Industrial Organization, Elsevier, vol. 67(C).
    4. Klein, Michael A, 2020. "Trade Secret Protection in a Developing Economy," MPRA Paper 103360, University Library of Munich, Germany.

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    More about this item

    JEL classification:

    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • J31 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Wage Level and Structure; Wage Differentials
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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