We test whether intellectual property rights foster or hinder innovation by estimating IV structural equations for a large
sample of Swiss firms. We find that better appropriability conditions at the industry level raise the number of competitors.
However, conditional on the given industry structure, individual firms face fewer competitors, if they actually use intellectual
property rights. The further impact of fewer competitors is to raise R&D, when initial competition is strong, but to reduce
it, when initial competition is weak ("inverted U").
JEL-Codes:O31, O32, O34, D22
Keywords:patents, innovation, competition, simultaneous system
Forschungsbereich:Industrieökonomie, Innovation und internationaler Wettbewerb