Intellectual Property Rights Protection, Ownership, and Innovation: Evidence from China

By: Lily Fang, Josh Lerner and Chaopeng Wu

Format:Print
| Language:English

Abstract

Using a difference-in-difference approach, we study how intellectual property right (IPR) protection affects innovation in China in the years around the privatizations of state-owned enterprises (SOEs). Innovation increases after SOE privatizations, and this increase is larger in cities with strong IPR protection. Our results support theoretical arguments that IPR protection strengthens firms’ incentives to innovate and that private sector firms are more sensitive to IPR protection than SOEs.