The Response of Inventors to IPR Reform

Abstract

We analyze the impact of intellectual property rights (IPR) reform on patenting in emerging economies. Building on the institutional view of the firm, we argue that IPR reform has a positive impact on both domestic and foreign patent applications because it increases the transparency, credibility, consistency, and ease of patenting for both types of inventors. However, we propose that a democratic political system reinforces the effect of IPR reform on foreign but not domestic patent applications, whereas a strong legal system heightens the impact of IPR reform on domestic but not foreign patent applications. The analyses of a panel of 501 patent applications in 18 countries from 1967-2009 provide support for these arguments.