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Institutional complementarities, intellectual property rights and technology in the knowledge economy

Published online by Cambridge University Press:  28 December 2015

ERKAN GÜRPINAR
ERKAN GÜRPINAR*
Affiliation:
Department of Economics, Social Sciences University of Ankara, Ankara, Turkey
*
*Email: erkan.gurpinar@asbu.edu.tr
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Abstract

This essay explores the trade-off between strong and weak intellectual property rights inside firms with reference to the importance of job termination. The probability of job termination has an effect on the relative profitability of different intellectual property rights regimes. Weak intellectual property rights may make it more attractive for skilled workers to join the firm, which will increase its profits while employing workers. However, when a job match is terminated the firm is left with the ownership of intellectual property only under a strong intellectual property rights regime. Based on the institutional complementarities approach we develop a simple model that analyses this trade-off, in which multiple organisational equilibria exist. We show that when intellectual property rights are taken into account, expectations such as increase in the skill and knowledge content of work are not inevitable in the knowledge economy.

Type
Research Article
Information
Journal of Institutional Economics , Volume 12 , Issue 3 , September 2016 , pp. 565 - 578
Copyright
Copyright © Millennium Economics Ltd 2015 

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