Entry, Reputation and Intellectual Property Rights Enforcement

26 Pages Posted: 23 Jul 2015

See all articles by Jiahua Che

Jiahua Che

The Chinese University of Hong Kong (CUHK)

Larry D. Qiu

The University of Hong Kong - Faculty of Business and Economics; Hong Kong University of Science & Technology (HKUST) - Department of Economics

Wen Zhou

The University of Hong Kong - School of Business

Date Written: November/Novembre 2014

Abstract

English 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 U‐shaped 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.

French Abstract: Entrée, réputation et mise en application des droits de propriété intellectuelle. On examine comment les questions de réputation amènent une plurinationale à différer son entrée dans un marché de pays en développement où la mise en application des droits de propriété intellectuelle (DPI) est faiblarde. On montre que les violations de DPI en équilibre émergent seulement dans de telles circonstances. Assumant constante l'incitation à innover de la plurinationale, une meilleure mise en application des DPI encourage l'entrée, mais réduit le bien‐être social. La relation entre l'incitation à innover de la plurinationale et la robustesse de la mise en application des DPI prend la forme d'un U inversé. Si cédulé de manière approprié, cependant, une mise en application robuste des DPI peut stimuler l'innovation sans compromettre le bien‐être social. On dérive des implications testables à propos des violations de DPI observables.

JEL Classification: D82, F10, F12, F23

Suggested Citation

Che, Jiahua and Qiu, Larry Dongxiao and Zhou, Wen, Entry, Reputation and Intellectual Property Rights Enforcement (November/Novembre 2014). Canadian Journal of Economics/Revue canadienne d'économique, Vol. 47, Issue 4, pp. 1256-1281, 2014. Available at SSRN: https://ssrn.com/abstract=2634687 or http://dx.doi.org/10.1111/caje.12104

Jiahua Che (Contact Author)

The Chinese University of Hong Kong (CUHK) ( email )

Shatin, N.T.
Hong Kong
Hong Kong

Larry Dongxiao Qiu

The University of Hong Kong - Faculty of Business and Economics ( email )

Pokfulam Road
Hong Kong
China

Hong Kong University of Science & Technology (HKUST) - Department of Economics ( email )

School of Economics and Finance
University of Hong Kong
Pokfulam
Hong Kong

HOME PAGE: http://www.bm.ust.hk/~larryqiu/

Wen Zhou

The University of Hong Kong - School of Business ( email )

Meng Wah Complex
Pokfulam Road
Hong Kong
China

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