2026-04-03T22:44:00Zhttps://recercat.cat/oai/request

oai:recercat.cat:10230/117372025-12-13T00:30:59Zcom_2072_6col_2072_452953

00925njm 22002777a 4500 dc Ponzetto, Giacomo A. M. author 2017-07-26T10:50:19Z 2017-07-26T10:50:19Z 2008-12-01 2017-07-23T02:13:42Z I provide a justification of intellectual property rights as a source of static efficiency gains in manufacturing, rather than dynamic benefits from greater innovation. I develop a property-rights model of a supply relationship with two dimensions of non-contractible investment. In equilibrium, the first best is attained if and only if ownership of tangible and intangible assets is equally protected. If IP rights are weaker, the organization of the firm is distorted and efficiency declines: the final producer must either integrate her suppliers, which prompts a decline in their investment; or else risk their defection, which entails a waste of her expertise. My model predicts a greater prevalence of vertically integrated manufacturers where IP rights are weaker, and a switch from integration to outsourcing over the product cycle. Empirical evidence on the international supply chains of multinational companies bears out both predictions. As a normative implication, I find that IP rights should be strong but narrowly defined, to protect a business without holding up non-competing derivative innovations. intellectual property organization hold-up problem property rights vertical integration outsourcing product cycle spin-off licensing Macroeconomics and International Economics Intellectual property rights and efficient firm organization