Import competition, multi-product firms, and basic innovation

Runjuan Liu () and Carlos Rosell

Journal of International Economics, 2013, vol. 91, issue 2, 220-234

Abstract: How does firm strategy to produce basic innovation respond to international trade? Given the importance of basic innovation for economic growth and welfare, better understanding of this question is essential. In this vein we combine patent, firm, product, and trade data to show that when confronted with higher import penetration, the nature of firm innovation becomes less basic. We propose that underlying this result is the interplay between multi-product firms that narrow their product scope when exposed to greater import competition and the difficulty inventors face when capturing all benefits derived from their basic innovations.

Keywords: Basic innovation; Import competition; Multi-product firm (search for similar items in EconPapers)
JEL-codes: F15 F19 O31 O32 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (14)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:inecon:v:91:y:2013:i:2:p:220-234

DOI: 10.1016/j.jinteco.2013.08.004

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