The Innovation Threshold
AbstractIn this paper, we propose an economic model to analyse the sales out of new products. This model accounts for the fact that even among firms for which R&D is a permanent activity, a fraction of firms does not have sales of innovative products during a two-year observation period. We propose a model in which the fixed costs of introduction is a major concern in the decision making process. In a structural model we estimate the fixed costs of the market introduction of new products and explain subsequent sales of innovative products. We examine an indicator of innovative output, i.e. sales of products 'new to the firm'. We estimate fixed costs thresholds using data from the Dutch part of the Community Innovation Survey (CIS) from 1998. R&D intensity, competition and market structure have a positive impact on sales of new products. The most important factors to decrease the fixed costs threshold of introduction are product related R&D investments, R&D subsidies and knowledge spillovers.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Tilburg University, Tilburg Law and Economic Center in its series Discussion Paper with number 2007-008.
Date of creation: 2007
Date of revision:
Contact details of provider:
Web page: http://www.tilburguniversity.nl/tilec/
Innovation; Product R&D; Threshold model;
Other versions of this item:
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
- O30 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - General
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002.
"Competition and Innovation: An Inverted U Relationship,"
NBER Working Papers
9269, National Bureau of Economic Research, Inc.
- 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.
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and innovation: an inverted U relationship," IFS Working Papers W02/04, Institute for Fiscal Studies.
- Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005. "Competition and Innovation: An Inverted-U Relationship," Scholarly Articles 4481507, Harvard University Department of Economics.
- Serguei Kaniovski, 2005.
"Product differentiation and competitive selection,"
Journal of Evolutionary Economics,
Springer, vol. 15(5), pages 567-580, November.
- Gort, Michael & Klepper, Steven, 1982. "Time Paths in the Diffusion of Product Innovations," Economic Journal, Royal Economic Society, vol. 92(367), pages 630-53, September.
- Mairesse ,Jacques & Mohnen,Pierre, 2001.
"To Be Or Not To Be Innovative: An Exercise In Measurement,"
038, Maastricht University, Maastricht Economic Research Institute on Innovation and Technology (MERIT).
- Jacques Mairesse & Pierre Mohnen, 2001. "To Be or Not To Be Innovative: An Exercise in Measurement," NBER Working Papers 8644, National Bureau of Economic Research, Inc.
- Stephen Nickell, 1993.
"Competition and Corporate Performance,"
CEP Discussion Papers
dp0182, Centre for Economic Performance, LSE.
- Steven Klepper & Kenneth L. Simons, 2000. "The Making of an Oligopoly: Firm Survival and Technological Change in the Evolution of the U.S. Tire Industry," Journal of Political Economy, University of Chicago Press, vol. 108(4), pages 728-760, August.
- Jovanovic, Boyan & MacDonald, Glenn M, 1994.
"The Life Cycle of a Competitive Industry,"
Journal of Political Economy,
University of Chicago Press, vol. 102(2), pages 322-47, April.
- Boyan Jovanovic & Glenn MacDonald, 1993. "The Life-Cycle of a Competitive Industry," NBER Working Papers 4441, National Bureau of Economic Research, Inc.
- Jovanovic, B. & MacDonald, G.M., 1992. "The Life-Cycle of Competitive Industry," Papers 92-09, Rochester, Business - Financial Research and Policy Studies.
- Geroski, P A & Walters, C F, 1995. "Innovative Activity over the Business Cycle," Economic Journal, Royal Economic Society, vol. 105(431), pages 916-28, July.
- Scherer, F M, 1992. "Schumpeter and Plausible Capitalism," Journal of Economic Literature, American Economic Association, vol. 30(3), pages 1416-33, September.
- Bruno Cassiman & Reinhilde Veugelers, 2002. "R&D Cooperation and Spillovers: Some Empirical Evidence from Belgium," American Economic Review, American Economic Association, vol. 92(4), pages 1169-1184, September.
- Kamien, Morton I & Schwartz, Nancy L, 1975. "Market Structure and Innovation: A Survey," Journal of Economic Literature, American Economic Association, vol. 13(1), pages 1-37, March.
- Cohen, Wesley M & Klepper, Steven, 1996. "A Reprise of Size and R&D," Economic Journal, Royal Economic Society, vol. 106(437), pages 925-51, July.
- Richard R. Nelson, 1995. "Recent Evolutionary Theorizing about Economic Change," Journal of Economic Literature, American Economic Association, vol. 33(1), pages 48-90, March.
- Gary L. Lilien & Pamela D. Morrison & Kathleen Searls & Mary Sonnack & Eric von Hippel, 2002. "Performance Assessment of the Lead User Idea-Generation Process for New Product Development," Management Science, INFORMS, vol. 48(8), pages 1042-1059, August.
- Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
- Julian Fennema & Wilko Letterie & Gerard Pfann, 2006. "The Timing of Investment Episodes in the Netherlands," De Economist, Springer, vol. 154(3), pages 373-388, September.
- Nelson, Forrest D., 1977. "Censored regression models with unobserved, stochastic censoring thresholds," Journal of Econometrics, Elsevier, vol. 6(3), pages 309-327, November.
- Peeters, T.J.G., 2013. "External knowledge search and use in new product development," Open Access publications from Tilburg University urn:nbn:nl:ui:12-5906731, Tilburg University.
- Jaap W.B. Bos & Ryan C.R. van Lamoen & Mark W.J.L. Sanders, 2011. "Producing Innovations: Determinants of Innovativity and Efficiency," DEGIT Conference Papers c016_060, DEGIT, Dynamics, Economic Growth, and International Trade.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Richard Broekman) The email address of this maintainer does not seem to be valid anymore. Please ask Richard Broekman to update the entry or send us the correct address.
If references are entirely missing, you can add them using this form.