Essays on Innovation Economics

This dissertation is a collection of essays which examines both how firms alter their innovative activity in response to changes in their environment and the broader economic implications of these decisions. In the first chapter I introduce a novel dataset which classifies patents as product or process innovations and then examine how firms change their product and process innovation in response to increased competition. I find that firms increase their product innovation in response to increased import competition, but import competition has no effect on process innovation. The second chapter underscores the importance of the first chapter by providing evidence that product innovations generate more knowledge spillovers than process innovations. As knowledge spillovers generate positive externalities, the finding suggests that the gap between the social and private value of innovation is wider for product innovation. In the third chapter I investigate whether the large increase in remote work that began during the COVID-19 pandemic had an impact on corporate innovation. Utilizing within-firm variation, I find that after the start of the pandemic offices located in more politically conservative counties had higher visit rates, but they exhibited no difference in patenting activity. The result suggests that firms and inventors were able to endogenously adjust to the post-pandemic world in order to maintain their innovative productivity.