| By: |
Argente, David;
Baslandze, Salomé;
Hanley, Douglas;
Moreira, Sara |
| Abstract: |
We study the relationship between patents and actual product innovation in the
market, and how this relationship varies with firms' market share. We use
textual analysis to create a new data set that links patents to products of
firms in the consumer goods sector. We find that patent filings are positively
associated with subsequent product innovation by firms, but at least half of
product innovation and growth comes from firms that never patent. We also find
that market leaders use patents differently from followers. Market leaders
have lower product innovation rates, though they rely on patents more. Patents
of market leaders relate to higher future sales above and beyond their effect
on product innovation, and these patents are associated with declining product
introduction on the part of competitors, which is consistent with the notion
that market leaders use their patents to limit competition. We then use a
model to analyze the firms' patenting and product innovation decisions. We
show that the private value of a patent is particularly high for large firms
as patents protect large market shares of existing products. |
| Keywords: |
creative destruction; growth; Innovation; patent value; patents; productivity |
| JEL: |
O3 O4 |
| Date: |
2020–05 |
| URL: |
http://d.repec.org/n?u=RePEc:cpr:ceprdp:14692&r=all |