This article analyzes the effects of foreign patent rights on U.S. bilateral exports. The empirical analysis covers three highly disaggregated drug industries over three decades. We estimate bilateral trade equations for each industry using cross-country data on the strength of national patent rights. The findings show that strong foreign patent rights enhance the market power of U.S. drug exporters across countries with weak imitative abilities. Alternatively, strong foreign patent rights stimulate the market expansion of U.S. drug exports across countries with strong imitative abilities. These effects are larger in magnitude during the 1980-90s relative to the 1970s.
Bibliographical noteFunding Information:
Bilateral trade (X) is the dollar value of U.S. bilateral exports, detailed by country of destination, by year, and by four-digit Standard Industrial Classification industry. These data were computed as part of a National Bureau of Economic Research (NBER) project with funding from the National Science Foundation (see Robert C. Feenstra, “NBER Trade Database, Disk 3: U.S. Exports, 1972–1994, with State Exports and Other U.S. Data,” NBER Working paper 5990, April 1997).
- Patent rights