Authorized patents and total factor productivity under intensified market competition: Quasi-natural experimental evidence from China

Chinese government issued the foreign investment industry guidance catalog in 2011, which increased efforts to encourage foreign investment. We designed a quasi-natural experiment based on this event to examine the impact of this policy on innovation and its economic benefits. Under this policy, the number of patent authorizations, mainly involving noninvention patents, increased significantly. The introduction of the policy intensified competition in the industries included in the catalog, and various types of patents obtained by enterprises in those industries significantly improved their total factor productivity (TFP). The nature and internal governance structure of enterprises had heterogeneous effects on productivity.