Quantity vs. Value: Divergent Innovation Outcomes Under Chinese Import Pressure
Publication Date
5-6-2025
Abstract
We explore the impact of Chinese import competition on innovation in U.S. manufacturing firms. Our analysis uncovers a striking divergence in innovation outcomes: although firms boost their patent output, the economic value and technological significance of these patents decline. More specifically, the firms transition from groundbreaking inventions to a series of incremental advancements aimed at differentiating their product lines. Our findings reconcile two foundational views on competition and innovation-one emphasizing rent erosion and the other innovation stimulation-by showing that competitive pressure can simultaneously encourage more innovation while reducing its economic value.
Document Type
Article
Keywords
Chinese import competition, Innovation, Product differentiation, Trade and innovation, Globalization
Disciplines
Finance
DOI
10.2139/ssrn.5243634
Source
SMU Cox: Finance (Topic)
Language
English
