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Industrial concentration, price-cost margins, and innovation

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  • Flath, David

Abstract

This paper explores a panel data set matching establishment-based production statistics from Japan's Census of Manufacturers with wholesale price indices from the Bank of Japan, and Herfindahl indices from the Japan Fair Trade Commission. The data include annual observations over the period 1961-1990, for 74 industries at the four-digit s.i.c. level. I estimate Cobb-Douglas production functions and Solow residuals for each industry and then use these estimates to further analyze the determinates of industrial concentration and innovation. The industries having great capital intensity and small employment of labor tend to be more concentrated. Cross-section estimates reveal a U-shaped mapping from concentration to innovation.

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Bibliographic Info

Article provided by Elsevier in its journal Japan and the World Economy.

Volume (Year): 23 (2011)
Issue (Month): 2 (March)
Pages: 129-139

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Handle: RePEc:eee:japwor:v:23:y:2011:i:2:p:129-139

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Web page: http://www.elsevier.com/locate/inca/505557

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Keywords: Technological change Industrial concentration Production function;

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  1. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: An Inverted-U Relationship," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 701-728, May.
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  3. Richard Blundell & Steve Bond, 1999. "GMM estimation with persistent panel data: an application to production functions," IFS Working Papers W99/04, Institute for Fiscal Studies.
  4. Flath, David, 2005. "The Japanese Economy," OUP Catalogue, Oxford University Press, edition 2, number 9780199278619.
  5. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, vol. 64(6), pages 1263-97, November.
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  7. Hall, Robert E, 1988. "The Relation between Price and Marginal Cost in U.S. Industry," Journal of Political Economy, University of Chicago Press, vol. 96(5), pages 921-47, October.
  8. Ackerberg, Daniel & Caves, Kevin & Frazer, Garth, 2006. "Structural identification of production functions," MPRA Paper 38349, University Library of Munich, Germany.
  9. Klette, T.J., 1998. "Market Power, Scale Economies and Productivity: Estimates from a Panel of Establishment Data," Memorandum 15/1998, Oslo University, Department of Economics.
  10. Okada, Yosuke, 2005. "Competition and productivity in Japanese manufacturing industries," Journal of the Japanese and International Economies, Elsevier, vol. 19(4), pages 586-616, December.
  11. David Flath, 2010. "Are There Any Cournot Industries?," ISER Discussion Paper 0766, Institute of Social and Economic Research, Osaka University.
  12. Wu, De-Min, 1973. "Alternative Tests of Independence Between Stochastic Regressors and Disturbances," Econometrica, Econometric Society, vol. 41(4), pages 733-50, July.
  13. Yosuke Okada, 2005. "Competition and Productivity in Japanese Manufacturing Industries," NBER Working Papers 11540, National Bureau of Economic Research, Inc.
  14. Richard Gilbert, 2006. "Looking for Mr. Schumpeter: Where Are We in the Competition-Innovation Debate?," NBER Chapters, in: Innovation Policy and the Economy, Volume 6, pages 159-215 National Bureau of Economic Research, Inc.
  15. SERGIO A. D e SOUZA, 2009. "ESTIMATING MARK-UPS FROM PLANT-LEVEL DATA -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 57(2), pages 353-363, 06.
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Cited by:
  1. David Flath, 2010. "Are There Any Cournot Industries?," ISER Discussion Paper 0766, Institute of Social and Economic Research, Osaka University.
  2. Matsumura, Toshihiro & Matsushima, Noriaki & Cato, Susumu, 2013. "Competitiveness and R&D competition revisited," Economic Modelling, Elsevier, vol. 31(C), pages 541-547.
  3. AMBASHI Masahito, 2013. "Does Competition Improve Industrial Productivity? An analysis of Japanese industries on the basis of the industry-level panel data," Discussion papers 13098, Research Institute of Economy, Trade and Industry (RIETI).

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