Intellectual Property Protection and Firm Innovation: Evidence from a Natural Experiment in China

35 Pages Posted: 16 Apr 2020 Last revised: 4 May 2020

See all articles by Maobin Xu

Maobin Xu

Central University of Finance and Economics (CUFE) - School of Finance

Kai Wu

Central University of Finance and Economics (CUFE) - School of Finance

Date Written: May 3, 2020

Abstract

In this study, we examine how the national intellectual property (IP) model cities awarded by the National Intellectual Property Administration affect firm innovation activities in China. The difference-in-difference regression with a matched sample indicates that the recognition of IP model cities increases firm innovation output and productivity, and the primary results are robust to alternative model specifications and variable definitions. Further analyses show that the increased firm innovation output is driven by local government support in fiscal and taxation policies. In detail, high-tech firms benefit from government subsidies, whereas non-high-tech ones are entitled to tax returns. However, subsidies for the former slightly crowd out those for the latter, and only high-tech firms have invested in subsidies for research and development activities. Our findings highlight the significant role of government IP protection in promoting firm innovations in China.

Keywords: Intellectual property, Government policy, Firm innovation, China

JEL Classification: O31, O34, O38

Suggested Citation

Xu, Maobin and Wu, Kai, Intellectual Property Protection and Firm Innovation: Evidence from a Natural Experiment in China (May 3, 2020). Available at SSRN: https://ssrn.com/abstract=3559108 or http://dx.doi.org/10.2139/ssrn.3559108

Maobin Xu

Central University of Finance and Economics (CUFE) - School of Finance ( email )

Beijing
China

Kai Wu (Contact Author)

Central University of Finance and Economics (CUFE) - School of Finance ( email )

Beijing
China

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
43
Abstract Views
291
PlumX Metrics