Innovation and competition: evidence from Uruguayan firms

Ramiro de Elejalde, Carlos Ponce and Flavia Roldán
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Carlos Ponce: Universidad Alberto Hurtado
Flavia Roldán: Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales. Departamento de Economía
Authors registered in the RePEc Author Service: Flavia Roldán

No 116, Documentos de Investigación from Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales

Abstract: This article investigates the relationship between product market competition and innovation. We find a negative and significant impact of competition on resources devoted to innovation activities, but a strong evidence of a positive and significant effect of competition on the efficiency of innovation expenditures using micro-level data from Uruguay. Moreover, we find that this effect is not negligible. An increase in one standard deviation (sd) in competition increases the efficiency in innovation expenditures between 1.0 sd and 2.5 sd depending on the measure of efficiency. Our finding has important implications for antitrust policy: as competition increases, resources devoted to innovation activities become more efficient.

Keywords: innovation; competition; Uruguay (search for similar items in EconPapers)
JEL-codes: L10 L12 (search for similar items in EconPapers)
Pages: 32 pages
Date: 2018-12
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