Spillover Effects of IP Protection in the Inter-war Aircraft Industry
Can granting IP protection to producers of one good affect the innovation rate in other related goods? To answer this question we exploit a unique policy experiment in the inter-war 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 the new designs they produced. We show that granting property rights to airframe producers increased innovation in airframes, but slowed down 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.
We thank Sascha Becker, Luis Cabral, Yongmin Chen, Jose Espin-Sanchez, Andy Ferrara, Daniel Gross, Stephan Heblich, Shawn Kantor, Naomi Lamoreaux, Petra Moser, Steve Nafziger, Tom Nicholas, Paul Rhode, Paul Scott, Carol Shiue, Vaidyanathan Venkateswaran, Fabian Waldinger, John Wallis, Alex Whalley, Larry White, Mark Wilson and seminar participants at Bristol, ITAM, Oxford, LSE, Michigan, NYU Stern, Colorado, Warwick, Williams, Yale, the Mountain West Economic History Conference, the NBER Summer Institute, and the Washington Area Economic History Seminar for helpful comments. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.