Bridging Innovation Distances: High-Speed Rail and Patent Agency Utilization in China

Abstract

Innovation intermediaries are instrumental in enhancing the efficacy of the innovation process, yet their accessibility tends to be geographically restricted, particularly in underdeveloped regions. This study examines whether the development of transportation infrastructure can alleviate these spatial frictions, promoting cross-regional utilization of intermediary services and subsequently improving innovation outcomes. Leveraging a unique database on patent agency utilization for all invention patents in China from 2003 to 2019, and employing high-speed rail (HSR) as a natural experiment, we estimate a staggered difference-in-difference model at the city-pair level. Our findings suggest that reductions in transportation costs lead to a substantial increase in cross-city PAU after HSR connection, especially in sectors with higher technology sophistication requiring more face-to-face interactions between inventors and agents. This research uncovers a novel mechanism through which HSR influences innovation and provides policy implications for optimizing innovation intermediaries through infrastructure development.