Product Market Competition and Innovation: What Can We Learn from Economic Theory?

Zhiqi Chen

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2017, vol. 12, issue 3, 450-464

Abstract: By means of a literature review, this paper strives to provide some clarity on the much-debated relationship between product market competition and firms¡¯ incentives to innovate. It shows that in the literature there does not exist a robust relationship between competition and incentives to innovate. Therefore, it would be futile to continue the debate over whether competition stimulates or hinders innovation. A more useful approach is to make a distinction between pre-innovation competition and post-innovation competition, as it provides a way for reconciling many of the seemingly contradictory findings from the literature. Another important insight from the literature is that the relationship between competition and innovation depends on the source of increased competition.

Keywords: innovation; product market competition; incentive (search for similar items in EconPapers)
JEL-codes: L10 O31 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:fec:journl:v:12:y:2017:i:3:p:450-464

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