Quantitative Assessment on Frictions in Technology Market

Yiran Zhang

MPRA Paper from University Library of Munich, Germany

Abstract: In this paper, I first document several novel stylized facts from Chinese patent transaction data matched with manufacturing firm data. A key finding is that Chinese patent market is significantly less developed than the U.S. To understand the causes and consequences, I build a model that endogenizes firm R&D investment, patent trading decision and productivity growth. I structurally estimate the model and find the following two main results. First, Chinese patent market plays a small role in growth. It only accounts for 5% of China’s GDP growth rate, as opposed to 17% in the U.S. Second, I evaluate the importance of three frictions calibrated to Chinese patent market: search cost, fixed transaction cost and information asymmetry. Search cost turns out to be the main friction to explain the gap of patent market size. If search cost was reduced to the US level, China’s productivity growth would increase by 0.16 percentage points.

Keywords: Under-developed Patent Market; patent quality; search cost; fixed cost; information asymmetry (search for similar items in EconPapers)
JEL-codes: O3 (search for similar items in EconPapers)
Date: 2021-01-06
New Economics Papers: this item is included in nep-com, nep-ino, nep-ipr, nep-isf and nep-tid
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https://mpra.ub.uni-muenchen.de/122170/1/MPRA_paper_122170.pdf revised version (application/pdf)

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