Working Paper
Patents to Products: Product Innovation and Firm Dynamics
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.
JEL Classification: O34; O31; O40;
https://doi.org/10.29338/wp2020-04
Status: Published in 2020
Access Documents
File(s): File format is application/pdf https://www.atlantafed.org/-/media/documents/research/publications/wp/2020/04/17/patents-to-products--product-innovation-and-firm-dynamics.pdf
Bibliographic Information
Provider: Federal Reserve Bank of Atlanta
Part of Series: FRB Atlanta Working Paper
Publication Date: 2020-04-17
Number: 2020-4a
Note: Revised September 2025