EconPapers    
Economics at your fingertips  
 

The Causal Effects of Competition on Innovation: Experimental Evidence

Philippe Aghion, Stefan Bechtold, Lea Cassar () and Holger Herz

No 19987, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: In this paper, we design two laboratory experiments to analyze the causal effects of competition on step-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by the ex post rents for firms that operate at the same technological level, i.e. for neck-and-neck firms. First, we find that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased competition decreases R&D investments by firms that are lagging behind, in particular if the time horizon is short. Third, we find that increased competition affects industry composition by reducing the fraction of sectors where firms are neck-and-neck. All these results are consistent with the predictions of step-by-step innovation models.

JEL-codes: C91 L10 O31 (search for similar items in EconPapers)
Date: 2014-03
New Economics Papers: this item is included in nep-com, nep-cse, nep-exp, nep-ino, nep-knm, nep-sbm and nep-tid
Note: PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (45)

Published as Philippe Aghion & Stefan Bechtold & Lea Cassar & Holger Herz, 2018. "The Causal Effects of Competition on Innovation: Experimental Evidence," The Journal of Law, Economics, and Organization, vol 34(2), pages 162-195.

Downloads: (external link)
http://www.nber.org/papers/w19987.pdf (application/pdf)

Related works:
Journal Article: The Causal Effects of Competition on Innovation: Experimental Evidence (2018) Downloads
Working Paper: The Causal Effects of Competition on Innovation: Experimental Evidence (2018)
Working Paper: The Causal Effects of Competition on Innovation: Experimental Evidence (2018)
Working Paper: The Causal Effects of Competition on Innovation: Experimental Evidence (2014) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:19987

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w19987

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2025-03-31
Handle: RePEc:nbr:nberwo:19987