Tickets to the Global Market: First US Patent Awards and Chinese Firm Exports

75 Pages Posted: 18 Aug 2023 Last revised: 22 Sep 2023

See all articles by Robin Kaiji Gong

Robin Kaiji Gong

HKUST Business School

Yao Amber Li

Hong Kong University of Science and Technology - School of Business and Management, Department of Economics; HKUST IEMS (Institute for Emerging Market Studies)

Kalina Manova

University College London - Department of Economics

Stephen Teng Sun

City University of Hong Kong (CityU) - Department of Economics and Finance; City University of Hong Kong (CityU) - Department of Accountancy

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Date Written: August 17, 2023

Abstract

We investigate how international patent activity enables firms from emerging economies to thrive in the global marketplace. We match Chinese customs data to US patent records, and leverage the quasi-random assignment of USPTO patent examiners to identify the causal effect of a US patent grant on the subsequent export performance of Chinese firms. Successful first-time patent applicants achieve significantly higher export growth, compared to otherwise similar first-time applicants that failed. This effect operates only in small part through the protection of market power for patent- related products in the US, and is largely driven by expansion in other markets. The response across destinations and products reveals that a US patent award signals the Chinese firm’s capacity to produce high-quality products and credibility to honor contracts, mitigating information frictions in international trade. There is little evidence for the relaxation of financial constraints or the promotion of follow-on innovation.

Keywords: Patent Grant; Trade; Quality Signal; USPTO; Patent to Product match

JEL Classification: D22; F10; F14;O30; O34

Suggested Citation

Gong, Kaiji and Li, Yao Amber and Manova, Kalina B. and Sun, Stephen Teng, Tickets to the Global Market: First US Patent Awards and Chinese Firm Exports (August 17, 2023). HKUST Business School Research Paper No. 2023-120, Available at SSRN: https://ssrn.com/abstract=4543307 or http://dx.doi.org/10.2139/ssrn.4543307

Kaiji Gong (Contact Author)

HKUST Business School ( email )

Clearwater Bay
Kowloon, 999999
Hong Kong

Yao Amber Li

Hong Kong University of Science and Technology - School of Business and Management, Department of Economics; HKUST IEMS (Institute for Emerging Market Studies) ( email )

Department of Economics, Hong Kong U of Sci&Tech
Clear Water Bay, Kowloon, Hong Kong SAR, China
Kowloon
Hong Kong

HOME PAGE: http://yaoli.people.ust.hk/

Kalina B. Manova

University College London - Department of Economics ( email )

Drayton House, 30 Gordon Street
30 Gordon Street
London, WC1H 0AX
United Kingdom

Stephen Teng Sun

City University of Hong Kong (CityU) - Department of Economics and Finance ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong

City University of Hong Kong (CityU) - Department of Accountancy ( email )

83 Tat Chee Avenue
Kowloon
Hong Kong
China

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