Abstract: 

We study the effect of stronger patent protection on innovation activities of firms and
firm-product level markups. Relying on cross-industry differences in the use of patents, we exploit
firm-level variation in exposure to India’s patent reform. For firms more exposed to stronger patent
protection, we find an increase in patenting and R&D expenditure post-reform. Additionally, we
estimate an increase in firm-product level markups after the reform, driven primarily by lower
marginal costs rather than higher prices. Cost-saving process and product innovations and output
expansion contribute to these cost-reductions, and incomplete pass-through explains a substantial
part of rising markups.

Location: 

Université Évry Paris-Saclay, salle Malinvaud (312), bâtiment IDF