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

Patrik Gustavsson Tingvall () and Andreas Poldahl ()
Additional contact information
Patrik Gustavsson Tingvall: European Institute of Japanese Studies, Postal: Stockholm School of Economics, P.O. Box 6501, S-113 83 Stockholm, Sweden, http://www.hhs.se/eijs
Andreas Poldahl: Örebro Universitet, Postal: Örebro Universitet, Fakultetsgatan 1, 701 82 Örebro, http://www.oru.se

No 207, EIJS Working Paper Series from The European Institute of Japanese Studies

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)
Date: 2005-02-01
View list of references

Downloads: (external link)
http://swopec.hhs.se/eijswp/papers/eijswp0207.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: http://EconPapers.repec.org/RePEc:hhs:eijswp:0207

Access Statistics for this paper

More papers in EIJS Working Paper Series from The European Institute of Japanese Studies
Address: The European Institute of Japanese Studies, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden
Contact information at EDIRC.
Series data maintained by Nanhee Lee ().