International Patent Cooperation, Patent Prosecution Highway Agreements, and Export Product Quality

Abstract

This paper investigates how international cooperation for patent examination using Patent Prosecution Highway (PPH) agreements has affected the quality of firms' exports. Taking the PPH agreements signed between China and the export destinations as a quasi-natural experiment, we established a difference-in-difference-in-differences model. We found that international cooperation for patent examination caused firms to increase export quality to PPH partners in patent-intensive industries to a greater extent. This effect was more profound among PPH partners with stronger intellectual property protection, differentiated products and core products, and agreements along with the Patent Cooperation Treaty. We also found that PPH agreements increased the number of Chinese patent applications filed in PPH partners, patent applications by PPH partners in China, and the level of innovation, all of which constitute the major channels through which export quality to PPH partners increases. Our findings demonstrate that international patent cooperation has played an important role in promoting international trade quality.