Competition and Innovation in Markets for Technology

Jean-Etienne de Bettignies, Hua Fang Liu (), David Robinson and Bulat Gainullin ()
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Hua Fang Liu: College of Business and Public Management, Kean University, Union, New Jersey 07083
Bulat Gainullin: Independent Strategy Consultant

Management Science, 2023, vol. 69, issue 8, 4753-4773

Abstract: We examine the impact of product market competition on innovation in markets for technology. An innovator makes an investment in quality-improving innovation that can be licensed to one (targeted licensing) or all (market-wide licensing) product market competitors. Our model points to a U-shaped relationship between competition in licensee product markets and innovation in the market for technology: at low levels of competition, market-wide licensing is optimal, and competition reduces innovation, whereas at high levels of competition, targeted licensing is optimal and competition increases innovation. Our empirical analysis using a large panel of U.S. data provides clear support for these predictions linking competition, innovation, and licensing.

Keywords: competition; licensing; innovation; import tariffs (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:69:y:2023:i:8:p:4753-4773

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