Abstract

Products embodying intellectual property are exported globally, yet intellectual property regulations remain national. When firms face product adjustment costs, intellectual property regulatory decisions can have effects on prices and productivity in other markets and across all the firms’ products. We study how Taiwanese firms respond to the loss of intellectual property protection in the Unites States. Using highly detailed firm-product-level data from 2000 to 2014 to estimate product level prices and productivity, we find three results. First, the loss of a patent invalidity case in the United States reduces product level export quantities, increases product level prices in export markets, but reduces product level productivity. Second, the loss of a patent invalidity case in the United States reduces product level domestic quantity, increases product level prices in domestic markets, and also reduces product level productivity. Third, the prices of other products in both domestic and export markets fall. Intellectual property embodied in marquee products can propagate intellectual property decisions across markets and products.