The effect of patent grant on the geographic reach of patent trade

This paper examines whether patents increase the geographic reach of the market for ideas. By employing a dataset of 25,127 US patents traded between US located firms, we find that patents sold during application phase are less likely to be traded outside the seller's state than patents that have been issued. To tackle the endogeneity issues we employ coarsened exact matching techniques. We find that patent grant increases the likelihood of a patent to be traded across boundaries of the state. This evidence is stronger for patents originating from the less innovative US states.