Is There Really an Inverted U-shaped Relation Between Competition and R&D?

Andreas Poldahl () and Patrik Tingvall
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Andreas Poldahl: FIEF, Postal: and ESI, Örebro University, SE-701 82 Örebro, Sweden

No 204, Working Paper Series from Trade Union Institute for Economic Research

Abstract: We test whether predictions of the Aghion and Howitt (2004) model are supported by firm level data. In particular, we analyze if there is an inverted U-shaped relation between competition and R&D. Results show that the inverted U-shaped relation is supported by the Herfindahl index but not by the price cost margin. Using the Herfindahl index results suggest that breaking up monopolies increases R&D while further increases in competition most likely leads to reduced R&D. Comparing different estimators, we find that time-series based estimators typically result in less clear-cut results, probably driven by a lack of time series variation in measures of competition.

Keywords: R&D; Competition; Firm size; Spillovers (search for similar items in EconPapers)
JEL-codes: D40 L10 L60 O30 (search for similar items in EconPapers)
Pages: 25 pages
Date: 2005-02-27
New Economics Papers: this item is included in nep-com and nep-ino
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Citations: View citations in EconPapers (3)

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http://swopec.hhs.se/fiefwp/papers/WP204.pdf (application/pdf)

Related works:
Journal Article: Is there really an inverted U-shaped relation between competition and R&D? (2006)
Journal Article: Is there really an inverted U-shaped relation between competition and R&D? (2006)
Working Paper: Is There Really an Inverted U-shaped Relation Between Competition and R&D? (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:hhs:fiefwp:0204

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