International patent protection and trade: Transaction-level evidence

Abstract

We report a hitherto undocumented causal mechanism of how patent protection affects exports. The empirical analysis leverages unique data on the worldwide patenting and exporting activities at the product level for the universe of French firms. Exploiting heterogeneity of patent coverage within firm–product–country destinations, we find evidence of a patent premium. Goods protected by patents in a destination country are associated with higher export quantities, ceteris paribus. The effect ranges between four and eleven percent. The causality of the finding is confirmed using rejected patent applications, which are exogenous to the firm. Exports collapse when firms lose patent protection.

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