Poldahl, Andreas () (FIEF) Gustavsson Tingvall, Patrik () (FIEF)
Abstract
We test whether predictions of the Aghion and Howitt (2004) model are supported by firm level data. In particular, we analyze if there is an inverted U-shaped relation between competition and R&D. Results show that the inverted U-shaped relation is supported by the Herfindahl index but not by the price cost margin. Using the Herfindahl index results suggest that breaking up monopolies increases R&D while further increases in competition most likely leads to reduced R&D. Comparing different estimators, we find that time-series based estimators typically result in less clear-cut results, probably driven by a lack of time series variation in measures of competition.
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Publisher Info
Paper provided by Trade Union Institute for Economic Research in its series Working Paper Series with number
204.
References listed on IDEAS 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.:
Clarke, Roger & Davies, Stephen W, 1982.
"Market Structure and Price-Cost Margins,"
Economica,
London School of Economics and Political Science, vol. 49(195), pages 277-87, August.
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