Competition and Innovation: An Inverted-U Relationship
Peter Howitt,
Rachel Griffith,
Philippe Aghion,
Richard Blundell () and
Nicholas Bloom
Scholarly Articles from Harvard University Department of Economics
Abstract:
This paper investigates the relationship between product market competition and innovation. We find strong evidence of an inverted-U relationship using panel data. We develop a model where competition discourages laggard firms from innovating but encourages neck-and-neck firms to innovate. Together with the effect of competition on the equilibrium industry structure, these generate an inverted-U. Two additional predictions of the model—that the average technological distance between leaders and followers increases with competition, and that the inverted-U is steeper when industries are more neck-and-neck—are both supported by the data.
Date: 2005
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Citations: View citations in EconPapers (2057)
Published in Quarterly Journal of Economics
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http://dash.harvard.edu/bitstream/handle/1/4481507/aghion_invertedu.pdf (application/pdf)
Related works:
Journal Article: Competition and Innovation: an Inverted-U Relationship (2005) 
Working Paper: Competition and innovation: an inverted U relationship (2002) 
Working Paper: Competition and Innovation: An Inverted U Relationship (2002) 
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Persistent link: https://EconPapers.repec.org/RePEc:hrv:faseco:4481507
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