INNOVATION AND COMPETITIVE PRESSURE -super-*
AbstractI analyze the effects of competition on process innovation and product introduction and obtain robust results that hold for a range of market structures and competition modes. It is found that increasing the number of firms tends to decrease cost reduction expenditure per firm, whereas increasing the degree of product substitutability, with or without free entry, increases it-provided that the average demand for product varieties does not shrink. Increasing market size increases cost reduction expenditure per firm and has ambiguous effects on the number of varieties offered, while decreasing the cost of entry increases the number of entrants and varieties but reduces cost reduction expenditure per variety. The results are extended to other measures of competitive pressure and to investment in product quality. The framework and results shed light on empirical strategies to assess the impact of competition on innovation. Copyright 2008 The Authors. Journal compilation 2008 Blackwell Publishing Ltd. and the Editorial Board of The Journal of Industrial Economics.
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Bibliographic InfoArticle provided by Wiley Blackwell in its journal The Journal of Industrial Economics.
Volume (Year): 56 (2008)
Issue (Month): 3 (December)
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Web page: http://www.blackwellpublishing.com/journal.asp?ref=0022-1821
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- John Van Reenen, 2010.
"Does Competition Raise Productivity Through Improving Management Quality?,"
CEP Discussion Papers
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- Van Reenen, John, 2011. "Does competition raise productivity through improving management quality?," International Journal of Industrial Organization, Elsevier, vol. 29(3), pages 306-316, May.
- R. Andergassen, 2011. "Board of director collusion, managerial incentives and firm values," Working Papers wp795, Dipartimento Scienze Economiche, Universita' di Bologna.
- Agnes Bäker & Werner Güth & Kerstin Pull & Manfred Stadler, 2011. "Creativity, Analytical Skills, Personality Traits, and Innovation Game Behavior in the Lab: An Experiment," Jena Economic Research Papers 2011-056, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
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