"Mapping U.S.-China Technology Decoupling, Innovation, and Firm Performance" (with Wei Jiang and Danqing Mei). Management Science, 2024, 70 (12), 8386-8413.
Best Paper Award at China International Conference in Finance (CICF), VoxChina
"Does Trading Spur Specialization? Evidence from Patenting" (with Xuan Tian and Chunrui Liu). Management Science, forthcoming.
"Invest Local or Remote? The Effects of COVID-19 Lockdowns on Venture Capital Investment around the World" (with Xuan Tian, Chunrui Liu, and Kexin Wang). Management Science, forthcoming.
"Financing Ventures" (with Jeremy Greenwood and Juan M. Sanchez). International Economic Review, 2022, 63 (3), 1021–1053.
“Venture Capital: A Catalyst for Innovation and Growth” (with Jeremy Greenwood and Juan M. Sanchez). Federal Reserve Bank of St. Louis Review, Second Quarter 2022, pp. 120-30.
“An Elementary Model of VC Financing and Growth” (with Jeremy Greenwood, Juan M. Sanchez, and Hiroshi Inokuma). Federal Reserve Bank of St. Louis Review, First Quarter 2023, pp. 66-73.
(joint with Zhu Wang)
R&R, Journal of Financial Economics
On the Programs: International Industrial Organization Conference, Economics of Payments XI Conference, China International Conference in Macroeconomics, Annual Conference in Digital Economics
Abstract: Paying with mobile phones is a latest innovation transforming people’s payment behavior around the world. However, advanced economies like the U.S. are found lagging behind in mobile payment adoption. We construct a dynamic model with sequential payment innovations to explain this puzzle, which uncovers how advanced economies’ past success in adopting card payment drags their feet in the mobile payment race. Our calibrated model matches the cross-country adoption patterns of card and mobile payments, and also explains why advanced and developing countries favor different mobile payment solutions. Based on the model, we conduct quantitative exercises for welfare and policy analyses.
(joint with Salomé Baslandze and Felipe Saffie)
Abstract: In the last two decades, the world has witnessed the rise of Chinese innovation. China, once a manufacturing hub for the West, has become a major player in the development of many new technologies. We assess how foreign knowledge spillovers spurred this transformation. To this end, we assemble a rich micro-level data set of firm patenting and accounting information. The aggregate data show that over time Chinese firms have gained leadership over foreign firms in China both in terms of production and patenting. Nevertheless, the aggregate trends mask rich industry heterogeneity pointing to the limits of cross-firm knowledge spillovers. While foreign firms have lost market leadership in low-tech (simple) industries, they have maintained strong leadership in high-tech (complex) industries. Exploring foreign knowledge spillovers using patent citations data, we show that only firms in low-tech (simple) industries eventually decrease their reliance on foreign knowledge for innovation. Our findings suggest that imitation is a path to indigenous innovation only in low-tech (simple) industries and point to the need of industry-specific policies.
Abstract: Stronger intellectual property rights (IPRs) induce specialization and contribute to economic growth. In the United States, a sweeping pro-patent legal reform in 1982 fostered specialization and enhanced firm performance. Around the world, countries experience faster economic growth when their innovating sectors are characterized by a higher level of specialization. An endogenous growth model with endogenous firm boundaries is developed to disentangle the relationship between legal institutions, business scope of the firms, and economic growth. Firm boundaries are identified by the number of intermediate inputs produced in-house. The production technology of every intermediate input is embodied in a patent. To perform R&D, a firm needs both the intermediate inputs based on its own patents and the inputs associated with others' patents. Each firm has two options to access to the inputs based on others' patents: it can buy their products or infringe on their patents by imitating their products. An infringer has to pay a legal settlement if it is sued and loses the lawsuit. To fend off infringement, a firm can expand its business scope and produce more intermediate inputs in-house. With stronger IPRs, the infringing problem becomes less severe, and the firm has weaker incentives to expand its business scope. Hence, stronger IPRs can induce specialization by deterring infringement. The model is matched with stylized facts of firm boundaries and patent litigation. The counterfactual analysis characterizes the optimal strength of IPRs and evaluates the actual patent law enforcement. The pro-patent legal reform in 1982 was welfare-enhancing, but it was too extreme.