Innovation, patents and trade: A firm‐level analysis

Abstract

Using microdata of firm exports and international patent activity, we find that Greek innovative exporters, identified by their patent filing activity, have substantially higher export revenues by selling higher quantities rather than charging higher prices. To account for this evidence, we set up a horizontally differentiated product model in which an innovative exporter competes for market share in a destination against many non‐innovative rivals. We argue that as the competition among the exporters of the non‐innovative product becomes more intense, the innovative firm exports more compared with its non‐innovative rivals in more distant markets, a prediction that is empirically confirmed in the dataset for Greek innovative exporters. Résumé Innovation, brevets et commerce : analyse au niveau de l’entreprise. À l’aide de microdonnées d’entreprises relatives aux exportations et aux activités de brevetage international, nous montrons que les exportateurs grecs innovants, identifiés par leurs dépôts de brevets, réalisent des gains à l’exportation nettement supérieurs en misant davantage sur les volumes de vente que sur l’augmentation des prix. Pour expliquer cette situation, nous avons élaboré un modèle de différenciation horizontale de produits dans lequel les exportateurs novateurs sont en compétition avec de nombreux concurrents non innovants afin de gagner des parts de marché. Nous montrons qu’à mesure que la compétition s’intensifie entre les exportateurs de produits non innovants, l’entreprise innovante exporte davantage que ses concurrents vers les marchés plus éloignés ; cette prédiction se vérifie de fac¸on empirique grâce aux données relatives aux exportateurs grecs innovants.

Innovativeness and export competitiveness in the East African Community

“…They conclude that the development in the political, regulatory and business environment in the developing countries especially the increase in higher education, positive R&D investments, infrastructure development, advances in information technology and increase in patents, increase the efficiency of innovations activities. However, Chalioti et al. (2016) show that patenting is expensive due to the legal requirements, fees involved and the penalties faced for any possible infringement once granted.…”

Product innovation and export strategy

“…They found a positive effect of innovation on the quantities of product exported by the firms and a negative effect of their export prices. Using a panel of Greek firms and the period 2006-2011, Chalioti et al (2020 show that patent applicants export more per product than non-applicants. The higher export values are primarily driven by higher export volumes rather than by higher prices.…”

Do cross‐border patents promote trade?

“…As mentioned above, the prior literature examining the empirical relationship between patenting and trade is limited in number and in scope. Most papers in this area have been constrained by data to examining a single flow (either imports or exports), a single bilateral relationship, a single country's trade relationships and/or a single industry (Anderton 1999, Greenhalgh 1990, Antimiani and Costantini 2013, Brunel 2019, Chen 2013, Chalioti et al 2020). The one exception is Palangkaraya et al (2017), who also use a PPML gravity specification to examine the effects of successful patent applications on bilateral trade.…”