Working Paper: NBER ID: w28231
Authors: Gerard Hoberg; Yuan Li; Gordon M. Phillips
Abstract: Using new measures of expanded Internet access in China and internet-based search, we examine how competitive shocks from China impact U.S. innovation through the markets for innovation and existing products. We identify shocks to innovation competition using the geography of Chinese internet penetration and Chinese import data. Increases in the ability of Chinese industry peers to gather knowledge through the internet are followed by reductions in U.S. R&D investment and subsequent patents, and increased patenting by Chinese firms. The new Chinese patents also cite the U.S. firms patents at a high rate, consistent with increased intellectual property competition.
Keywords: Internet Access; Innovation Competition; US-China Relations
JEL Codes: D43; F13; L21; L26; O31; O34
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Increased patenting by Chinese firms (O34) | Direct citations of US patents (O34) |
| Higher internet penetration (L96) | Increased complaints from US firms about competition from China (L49) |
| Competition in the market for intellectual property (L17) | Substantial negative impact on US innovation (F69) |
| Firms with more tangible assets (G32) | Maintain higher R&D levels despite competitive shocks (O39) |
| Increased Chinese internet penetration (F61) | Reductions in US R&D investment (O39) |
| Increased Chinese internet penetration (F61) | Fewer patents filed in the US (O34) |