Patents to Products: Product Innovation and Firm Dynamics

David Argente (), Salomé Baslandze (), Douglas Hanley and Sara Moreira ()

No 2020-4a, FRB Atlanta Working Paper from Federal Reserve Bank of Atlanta

Abstract: We combine NielsenIQ scanner data with USPTO patent records and apply natural language processing to match detailed product descriptions to patent texts for the consumer goods sector. We show that while more than half of product innovations originate from non-patenting firms, patent filings are on average followed by subsequent product introductions. Yet this relationship weakens with firm size. Patents held by market leaders also yield revenue premiums beyond what can be explained by their own product introductions and are associated with stronger deterrence of competitors’ innovations. To interpret these findings, we develop a simple growth model in which larger firms have stronger incentives to engage in strategic patenting—filing for protection rather than market innovation—which dampens innovation and slows creative destruction.

Keywords: innovation; products; strategic patents; creative destruction; competition; growth (search for similar items in EconPapers)
JEL-codes: O31 O34 O40 (search for similar items in EconPapers)
Pages: 105
Date: 2020-04-17
Note: Revised September 2025
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Published in 2020

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Related works:
Working Paper: Patents to Products: Product Innovation and Firm Dynamics (2020)
Working Paper: Patents to Products: Product Innovation and Firm Dynamics (2020)
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fedawp:101775

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DOI: 10.29338/wp2020-04

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