Abstrat:We study how the market for technology (facilitated by the establishment of patent exchanges in China) affects innovation specialization. We find that the market for technology induces (i) specialization between patent buyers and sellers, (ii) specialization between patent licensors and licensees, and (iii) specialization based on a firm’s R&D efficiency. All these three specialization patterns indicate that the market for technology promotes comparative advantage-based innovation specialization. Firms with a comparative advantage in creating innovation redirect their resources toward producing patents, whereas firms with a comparative advantage in commercializing innovation switch their effort toward launching new products. A firm also shrinks its scope of innovation and invents in technological fields with greater proximity. Financial friction hampers innovation specialization and relieving trading friction in the market for technology mitigates such negative consequences.
Does Trading Spur Specialization? Evidence from Patenting

Management Science
http://doi.org/10.1287/mnsc.2022.03174
About the author:Dr. Pengfei Han is an associate professor of finance at Guanghua School of Management, Peking University. He received his Ph.D. degree in economics from the University of Pennsylvania. His research focuses on innovation, entrepreneurship, venture capital, fintech, and economic growth. He has presented his research at various conferences including NBER Summer Institute Annual Meeting, NBER Chinese Economy Working Group Meeting, AFA Meeting, and WFA Meeting. His papers have been published in Management Science and International Economic Review, and his research has won the Best Paper Award at 2021 China International Conference in Finance. His recent papers study U.S.-China technology competition and technology decoupling, green finance and green innovation in China, government-sponsored venture capital programs in China, and international comparison of the payment systems.