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Entry, reputation and intellectual property rights enforcement

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  • Jiahua Che
  • Larry Qiu
  • Wen Zhou

Abstract

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 Ushaped 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.

Suggested Citation

  • Jiahua Che & Larry Qiu & Wen Zhou, 2014. "Entry, reputation and intellectual property rights enforcement," Canadian Journal of Economics, Canadian Economics Association, vol. 47(4), pages 1256-1281, November.
    • Handle: RePEc:cje:issued:v:47:y:2014:i:4:p:1256-1281
    DOI: 10.1111/caje.12104
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    Cited by:

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    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F10 - International Economics - - Trade - - - General
    • F12 - International Economics - - Trade - - - Models of Trade with Imperfect Competition and Scale Economies; Fragmentation
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business

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