Intellectual Property Rights and Entry into a Foreign Market: FDI vs. Joint Ventures

40 Pages Posted: 24 Jul 2006

See all articles by Alireza Naghavi

Alireza Naghavi

University of Bologna - Department of Economics

Dermot Leahy

National University of Ireland - University College Dublin; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: June 2006

Abstract

We study the effect of the intellectual property rights (IPR) regime of a host country (South) on a multinational's decision between serving a market via greenfield foreign direct investment to avoid the exposure of its technology or entering a joint venture (JV) with a local firm, which allows R&D spillovers under imperfect IPRs. JV is the equilibrium market structure when R&D intensity is moderate and IPRs strong. The South can gain from increased IPR protection by encouraging a JV, whereas policies to limit foreign ownership in a JV gain importance in technology intensive industries as complementary policies to strong IPRs.

Keywords: Joint Ventures, Intellectual Property Rights, Technology Transfer, R&D Spillovers, FDI Policy

JEL Classification: O34, F23, O32, F13, L24, O24

Suggested Citation

Naghavi, Alireza and Leahy, Dermot, Intellectual Property Rights and Entry into a Foreign Market: FDI vs. Joint Ventures (June 2006). FEEM Working Paper No. 97.06, Available at SSRN: https://ssrn.com/abstract=913924 or http://dx.doi.org/10.2139/ssrn.913924

Alireza Naghavi (Contact Author)

University of Bologna - Department of Economics ( email )

Piazza Scaravilli 2
Bologna, 40126
Italy

HOME PAGE: http://alirezanaghavi.altervista.org/

Dermot Leahy

National University of Ireland - University College Dublin ( email )

Department of Economics
Belfield
Dublin 4
Ireland
+353 1 706 7620 (Phone)
+353 1 283 0068 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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