Does Trading Spur Specialization? Evidence from Patenting

78 Pages Posted: 21 Dec 2020 Last revised: 22 Jan 2024

See all articles by Pengfei Han

Pengfei Han

Peking University, Guanghua School of Management

Chunrui Liu

University of International Business and Economics (UIBE) - Business School

Xuan Tian

Tsinghua University - PBC School of Finance

Date Written: January 16, 2024

Abstract

We study how patent trading affects innovation specialization based on patent exchanges in China. We find that the market for technology induces (i) specialization between patent buyers and sellers, (ii) specialization between patent licensors and licensees, and (iii) specialization based on a firm’s R&D efficiency. All these three specialization patterns indicate that the market for technology promotes comparative advantage-based innovation specialization. Firms with a comparative advantage in creating innovation redirect their resources toward producing patents, whereas firms with a comparative advantage in commercializing innovation switch their effort toward launching new products. A firm also shrinks its scope of innovation and invents in technological fields with greater proximity. Financial friction hampers innovation specialization and relieving trading friction in the market for technology mitigates such negative consequences.

Keywords: Innovation, Market for Technology, Patent Trading, Patent Licensing, Specialization, R&D, Patent

JEL Classification: O31, O33, O34, G14

Suggested Citation

Han, Pengfei and Liu, Chunrui and Tian, Xuan, Does Trading Spur Specialization? Evidence from Patenting (January 16, 2024). Available at SSRN: https://ssrn.com/abstract=3681360 or http://dx.doi.org/10.2139/ssrn.3681360

Pengfei Han (Contact Author)

Peking University, Guanghua School of Management ( email )

No 5 Yiheyuan Road, Haidian District
Beijing 100871
China

HOME PAGE: http://https://sites.google.com/view/pengfeihan/home

Chunrui Liu

University of International Business and Economics (UIBE) - Business School ( email )

Beijing
China

Xuan Tian

Tsinghua University - PBC School of Finance ( email )

No. 43, Chengfu Road
Haidian District
Beijing 100083
China
+86-10-62794103 (Phone)

HOME PAGE: http://xuantian.info/

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