Is there really an inverted U-shaped relation between competition and R&D?

Patrik Tingvall and Andreas Poldahl

Economics of Innovation and New Technology, 2006, vol. 15, issue 3, 101-118

Abstract: We test whether predictions of the Aghion et al. (Aghion, P., Bloom, N., Blundell, R., Griffith, R. and Howitt, P. (2004) Competition and Innovation: An Inverted U Relationship. NBER Working Paper series, No. 9269.) 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, whereas further increases in competition most likely lead 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)
Date: 2006
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Citations: View citations in EconPapers (52)

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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)
Working Paper: Is There Really an Inverted U-shaped Relation Between Competition and R&D? (2005)
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DOI: 10.1080/10438590500129755

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