Cross‐Border Patenting and the Margins of International Trade

ABSTRACT This paper investigates the impact of cross‐border patenting on the margins of international trade using disaggregated data on international patenting and trade flows for a broad cross‐section of countries globally from 1995 to 2018. We develop a theoretical framework of trade and firms' patenting decisions that motivates our empirical analysis. The main results reveal that cross‐border patenting has a larger effect on the extensive margin of trade compared to the intensive margin. This finding suggests that firms tend to seek patent protection in international markets prior to entering those markets with new products, rather than with their existing products.