| By: |
Stefano Bolatto;
Alireza Naghavi;
Gianmarco Ottaviano;
Katja Zajc Kejzar |
| Abstract: |
This paper introduces the concept of intangible assets in a property rights
model of sequential supply chains. Firms transmit knowledge to their suppliers
to facilitate input customization. Yet, to avoid knowledge dissipation, they
must protect the transmitted intangibles, the cost of which depends on the
knowledge intensity of inputs and the quality of institutions protecting
intellectual property rights (IPR) in supplier locations. When input knowledge
intensity increases (decreases) downstream and suppliers' investments are
complements, the probability of integrating a randomly selected input is
decreasing (increasing) in IPR quality and increasing (decreasing) in the
relative knowledge intensity of downstream inputs. Opposite but weaker
predictions hold when suppliers' investments are substitutes. Comprehensive
trade and FDI data on Slovenian firms' value chains provide evidence in
support of our model's predictions. They also suggest that, in line with our
model, better institutions may have very different effects on firm
organization depending on whether they improve the protection of tangible or
intangible assets. |
| Keywords: |
sequential production, intellectual property, intangible assets, appropriability, stage complementarity, upstreamness, firm organization, outsourcing, vertical integration |
| JEL: |
F12 F14 F21 F23 D23 L22 L23 L24 O34 |
| Date: |
2020–01 |
| URL: |
http://d.repec.org/n?u=RePEc:cep:cepdps:dp1673&r=all |