U.S. Innovation and Chinese Competition for Innovation Production

65 Pages Posted: 9 Dec 2018 Last revised: 21 Jul 2020

See all articles by Gerard Hoberg

Gerard Hoberg

University of Southern California - Marshall School of Business - Finance and Business Economics Department

Bruce Yuan Li

affiliation not provided to SSRN

Gordon M. Phillips

Dartmouth College - Tuck School of Business; National Bureau of Economic Research (NBER)

Date Written: March 15, 2019

Abstract

We examine how competitive shocks from China impact U.S. innovation through two distinct margins: the markets for innovation and existing products. We identify shocks to both margins using the geography of Chinese internet penetration and Chinese import data. Increases in the ability of Chinese industry peers to gather knowledge through the internet are followed by sharp reductions in U.S. R\&D investment and subsequent patents, and increased patenting by Chinese firms. The new Chinese patents also cite the patents of U.S. firms at a high rate, consistent with increased intellectual property competition. Overall, Chinese competition in intellectual property and in existing products are associated with decreased U.S. firm innovation.

Keywords: Innovation, competition, China, investment, internet penetration

JEL Classification: O31, O34, D43, F13

Suggested Citation

Hoberg, Gerard and Li, Bruce Yuan and Phillips, Gordon M., U.S. Innovation and Chinese Competition for Innovation Production (March 15, 2019). Tuck School of Business Working Paper No. 3294389, Available at SSRN: https://ssrn.com/abstract=3294389 or http://dx.doi.org/10.2139/ssrn.3294389

Gerard Hoberg (Contact Author)

University of Southern California - Marshall School of Business - Finance and Business Economics Department ( email )

Marshall School of Business
Los Angeles, CA 90089
United States

HOME PAGE: http://www-bcf.usc.edu/~hoberg/

Bruce Yuan Li

affiliation not provided to SSRN

Gordon M. Phillips

Dartmouth College - Tuck School of Business ( email )

Hanover, NH 03755
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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