Patents to Products: Product Innovation and Firm Dynamics

Abstract

Mexico), and Midwest Macro. Researcher(s)' own analyses were calculated (or derived) based in part on data from The Nielsen Company (US) LLC and marketing databases provided through the Nielsen data sets at the Kilts Center for Marketing Data Center at the University of Chicago Booth School of Business. The conclusions drawn from the Nielsen data are those of the researcher(s) and do not reflect the views of Nielsen. Nielsen is not responsible for, had no role in, and was not involved in analyzing and preparing the results reported herein. The views expressed here are those of the authors and not necessarily those of the Federal Reserve Bank of Atlanta or the Federal Reserve System. Any remaining errors are the authors' responsibility.

Innovative Growth Accounting

“…More recent examples include Kogan, Papanikolaou, Seru and Stoffman (2017) on patent counts and quality, Bloom, Jones, Van Reenen and Webb (2020) on R&D trends, and Acemoglu, Akcigit, Alp, Bloom and Kerr (2018) on both patents and R&D. Such studies are clearly useful, but are somewhat constrained by the propensity to patent (which is much higher in manufacturing) and the propensity to report formal R&D spending. Argente, Baslandze, Hanley and Moreira (2018) illustrate the limits of patenting data even within consumer products manufacturing, where they find a much higher propensity to patent a new product by large firms compared to small firms. In comparison, an advantage of our indirect approach is that it can be applied to the entire nonfarm business sector, including firms and plants that do not patent or report any R&D spending.…”

Connecting to Power: Political Connections, Innovation, and Firm Dynamics

“…In a recent work, Gutiérrez and Philippon (2019) focus on the political economy of business dynamism and argue that the existence of supranational regulators could adopt policies that would hurt competition and business dynamism. Andrews et al (2019) document a widening productivity gap between market leaders and followers, and Akcigit and Ates (2019a,b) and Argente et al (2020) argue that the declining knowledge diffusion from market leaders to followers due to defensive and strategic use of patenting would prevent rivals from leapfrogging the market leaders. One way to act strategically and defend the market could be to connect to the political system through politicians as shown in the current paper.…”

Untitled

“…I focus on three types of non-productive strategies for which micro-level evidence is mounting: political connections, non-productive patenting, and anti-competitive acquisitions. Across different contexts (Akcigit et al, 2018;Argente et al, 2020), we overwhelmingly find that as firms gain market shares, they rely more on non-productive strategies but reduce their productive, innovation-based strategies. This evidence can be easily understood through the lens of two classic effects in the economics literature: Arrow's replacement effect (Arrow, 1962) and "preserving-themarket" effect similar to Gilbert and Newbery (1982).…”