Essays on Economics of Innovation and International Trade

Abstract

This dissertation studies how firms share knowledge with business partners, protect their intellectual property rights, and organize production around the world. In the first chapter, I analyze patent citations which are often used to measure knowledge spillovers between firms. I show that even the most cited patents granted before 2000 received around 50% of citations from one firm only, and this concentration has increased up to 75% by 2014. I argue that firms frequently combine patents and trade secrets to protect their intellectual property, and that patent citations reflect intentional sharing of secrets between business partners. Then, I develop and test a theory of knowledge sharing between firms in a production network that accounts for the observed citation patterns. The second chapter, co-authored with Alice Wu, documents new facts on trade secret litigation. We use the textual analysis of litigation records to study the types of information firms protect as trade secrets, such as business or technological information, and the mechanisms for the misappropriation of these secrets, such as the mobility of employees across firms. We document the variation in litigation activity and the composition of trade secrets over time, across US states, across industries, and between firms based on their size. We develop a theory of knowledge sharing between firms which shows how to evaluate the welfare consequences of changes in trade secret laws, for example, the Defend Trade Secrets Act of 2016. The third chapter, co-authored with Professors Pol Antras, Teresa Fort, and Felix Tintelnot, studies the organization of production by multinational companies. We link US Census data on firms’ domestic establishments to BEA surveys on foreign direct investment to document a series of novel facts regarding the global assembly and global sourcing strategies of U.S. firms, and unveil systematic interdependencies in these firm decisions. We then develop a multi-country model in which firms decide on the location of their assembly plants (their assembly strategy) as well as the source of the inputs used in their plants worldwide (their sourcing strategy), and use the model to interpret our novel facts.