Competition and Innovation: An inverted-U relationship using Japanese industry data

Michiyuki Yagi and Shunsuke Managi

Discussion papers from Research Institute of Economy, Trade and Industry (RIETI)

Abstract: This study replicates a model of Aghion et al. ("Competition and Innovation: An inverted-u relationship," Quarterly Journal of Economics 2005; 120(2):701-728), which suggests that an inverted-U relationship exists between competition and innovation. We apply patent data and a competition measure based on Japanese firm-level and industry-average data from 1964 to 2006. In a constant slope model using a full dataset, we find the same inverted-U relationship as did Aghion-Bloom-Blundell-Griffith-Howitt (ABBGH). In decade and industry fixed-effects slope models, we find the inverted-U relationship to be fragile.

Pages: 46 pages
Date: 2013-07
New Economics Papers: this item is included in nep-com, nep-ind, nep-ino and nep-ure
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Citations: View citations in EconPapers (5)

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