Compulsory Licensing - Evidence from the Trading with the Enemy Act

Compulsory licensing allows firms in developing countries to produce foreign-owned inventions withoutthe consent of foreign patent owners. This paper uses an exogenous event of compulsory licensingafter World War I under the Trading with the Enemy Act to examine the long run effects of compulsorylicensing on domestic invention. Difference-in-differences analyses of nearly 200,000 chemical inventionssuggest that compulsory licensing increased domestic invention by at least 20 percent....