This paper studies the effect of foreign competition on the extent of forecasting bias. I focus on two biases often described in the behavioral economics literature: overoptimism and excessive belief in trends. Using data from firm-level surveys in five African countries, I show that firms that do not face foreign competition generate forecasts of sales growth that have greater trend and optimism biases than firms that have foreign competitors. I further provide evidence that these erroneous forecasts have real effects on firms' inventory management.

This paper examines how technology transfer within U. S. multinational firms changes in response to a series of IPR reforms undertaken by sixteen countries over the 1982–1999 period. Analysis of detailed firm-level data reveals that royalty payments for technology transferred to affiliates increase at the time of reforms, as do affiliate R&D expenditures and total levels of foreign patent applications. Increases in royalty payments and R&D expenditures are concentrated among affiliates of parent companies that use U. S. patents extensively prior to reform and are therefore expected to value IPR reform most. For this set of affiliates, increases in royalty payments exceed 30 percent.

One of the alleged benefits of the recent global movement to strengthen intellectual property rights (IPRs) is that such reforms accelerate transfers of technology between countries. The paper examines how technology transfer among U.S. multinational firms changes in response to a series of IPR reforms undertaken by 12 countries over the 1982-99 period. The analysis of detailed firm-level data reveal that royalty payments for intangibles transferred to affiliates increase at the time of reforms, as do affiliate research and development (R&D) expenditures and total levels of foreign patent applications. Increases in royalty payments and R&D expenditures are more than 20 percent larger among affiliates of parent companies that use U.S. patents more extensively prior to reform and therefore are expected to value IPR reform most.