Economics Seminar - The Not So Uniform Effects of Trade Secret Protection on Business Entry

We explore the consequences of trade secret protection for new business formation in the U.S.We find the states that adopt the Uniform Trade Secrets Act (UTSA), which enhances intellectual property rights, experience an overall decline in business entry rates. This result is driven by the reduction in small establishment entry rates. The negative effect is more pronounced in industries that are knowledge and trade secret intensive. By contrast, the law promotes the entry of medium and large establishments. Our findings highlight the important relationship between the regulatory environment governing intellectual property protection and business formation in the U.S.