Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, April 1, 2020

Foreign Competition and Domestic Innovation: Evidence from U.S. Patents

By: David H. AutorDavid DornGordon H. HansonGary PisanoPian Shu
Abstract: Manufacturing accounts for more than three-quarters of U.S. corporate patents. The competitive shock to this sector emanating from China’s economic ascent could in theory either augment or stifle U.S. innovation. Using three decades of U.S. patents matched to corporate owners, we quantify how foreign competition affects domestic innovation. Rising import exposure intensifies competitive pressure, reducing sales, profitability, and R&D expenditure at U.S. firms. Accounting for confounding sectoral patenting trends, we find that U.S. patent production declines in sectors facing greater import competition. This adverse effect is larger among initially less profitable and less capital-intensive firms.
URL: http://d.repec.org/n?u=RePEc:ces:ceswps:_7865&r=com

https://lawprofessors.typepad.com/antitrustprof_blog/2020/04/foreign-competition-and-domestic-innovation-evidence-from-us-patents.html

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