Working Paper: NBER ID: w26490
Authors: Walker Hanlon; Taylor Jaworski
Abstract: Can strengthening intellectual property (IP) protection for producers of one good affect innovation in other related goods? To answer this question, we exploit a unique policy experiment in the interwar military aircraft industry. Airframe designs had little IP protection before 1926, but changes passed by Congress in 1926 provided airframe manufacturers with enhanced property rights over new designs. We show that granting property rights to air-frame producers increased innovation in airframes, but slowed innovation in aero-engines, a complementary good where there was no change in the availability of IP protection. We propose and test a simple theory that explains these patterns.
Keywords: Intellectual Property; Innovation; Aircraft Industry; Interwar Period; Spillover Effects
JEL Codes: N72; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Enhanced property rights for airframe producers in 1926 (L93) | Increased innovation in airframes (L93) |
| Enhanced property rights for airframe producers in 1926 (L93) | Slowdown in innovation for complementary aeroengines (O39) |
| Enhanced property rights for airframe producers in 1926 (L93) | Vertical-complement mergers between airframe and aeroengine producers (L93) |