Innovation dynamics and endogenous market structure: econometric results from aggregated survey data

Sandra Gottschalk () and Norbert Janz ()

No 01-39, ZEW Discussion Papers from ZEW - Leibniz Centre for European Economic Research

Abstract: This paper examines empirically the relationship between innovation and market structure within a simultaneous framework at the industry level of aggregation. We use a model in which R&D affects both, demand and cost conditions. An optimization process leads to optimal industry R&D expenditure and market structure in a symmetric equilibrium. The model is applied to a newly constructed panel for Germany. Generalized Method of Moments (GMM) estimation techniques for dynamic panel data systems are used to estimate the parameters of interest. We found a positive long?run effect of R&D on markets? sales concentration. In contrast, competition enforces innovation, i.e. sales concentration has a negative impact on R&D.

Keywords: innovation; R&D; market structure; panel data; dynamic models; applied econometrics (search for similar items in EconPapers)
JEL-codes: C33 L11 L60 O31 (search for similar items in EconPapers)
Date: 2001
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Citations: View citations in EconPapers (19)

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Persistent link: https://EconPapers.repec.org/RePEc:zbw:zewdip:5394

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