Endogenous Market Structures and Innovation by Leaders: an Empirical Test

Federico Etro (), Dirk Czarnitzki and Kornelius Kraft

No 2011_04, Working Papers from Department of Economics, University of Venice "Ca' Foscari"

Abstract: Simple models of competition for the market with endogenous entry show that, contrary to the Arrow view, an endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). In line with our predictions, endogenous entry threats as perceived by the firms reduce R&D intensity for the average firm, but they increase it for an incumbent leader. These results hold after a number of robustness tests with instrumental variable regressions.

Keywords: Endogenous market structures; innovation; leadership (search for similar items in EconPapers)
JEL-codes: O31 O32 (search for similar items in EconPapers)
Pages: 350
Date: 2011
New Economics Papers: this item is included in nep-bec, nep-com, nep-ino and nep-tid
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Citations: View citations in EconPapers (11)

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Journal Article: Endogenous Market Structures and Innovation by Leaders: An Empirical Test (2014)
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Persistent link: https://EconPapers.repec.org/RePEc:ven:wpaper:2011_04

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