ECIN Replication Package for "Intellectual Property Rights and Innovation in Vertically Related Industries"

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This paper examines the economic impact of intellectual property rights (IPRs) in the
context of complementary vertical innovation by firms in upstream and downstream
industries. Empirical patterns suggest that industry downstreamness is associated
with a greater relative importance of patents versus trade secrecy in firm appropriation
strategies. Using a novel model of endogenous growth, I show that strengthening
patent protection generates downstream-biased technical change in most cases. The
corresponding reallocation of resources creates distributional effects from patent policy
that existing analysis do not fully account for. I examine the impact of these effects on
economic growth, welfare, and optimal patent policy.

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