Innovation, Competition and Incentives for R&D
AbstractThis paper analyses the relationship between past innovation output, competition, and future innovation input in a dynamic econometric setting. We distinguish two dimensions of competition that correspond to the concepts of product substitutability and entry barriers due to fixed costs. Based on firm-level panel data for Germany and Switzerland we obtain consistent results for both countries. Innovation output in t-1 as measured by the sales share of innovative products is positively related to the degree of product obsolescence in t, and negatively to the degree of substitutability in t in both countries. Further, we find that rapid product obsolescence provides positive incentives for higher – primarily product-oriented – R&D investments in t+1, while high substitutability exerts negative incentives for future R&D investment.
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Bibliographic InfoPaper provided by KOF Swiss Economic Institute, ETH Zurich in its series KOF Working papers with number 10-259.
Length: 34 pages
Date of creation: Jun 2010
Date of revision:
Innovation; R&D; Competition;
Other versions of this item:
- O3 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-07-03 (All new papers)
- NEP-COM-2010-07-03 (Industrial Competition)
- NEP-CSE-2010-07-03 (Economics of Strategic Management)
- NEP-ENT-2010-07-03 (Entrepreneurship)
- NEP-INO-2010-07-03 (Innovation)
- NEP-IPR-2010-07-03 (Intellectual Property Rights)
- NEP-MIC-2010-07-03 (Microeconomics)
- NEP-TID-2010-07-03 (Technology & Industrial Dynamics)
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.:
- Crepon, B. & Duguet, E. & Kabla, I., 1995. "A Moderate Support to Schumpeterian Conjectures from Various Innovation Measures," Papiers d'Economie MathÃÂ©matique et Applications 95.06, UniversitÃ© PanthÃ©on-Sorbonne (Paris 1).
- Crass, Dirk & Schwiebacher, Franz, 2013. "Do trademarks diminish the substitutability of products in innovative knowledge-intensive services?," ZEW Discussion Papers 13-061, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
- Pilar Beneito & María E. Rochina-Barrachina & Amparo Sanchis, 2012. "Patents, competition and firms’ innovation incentives," Working Papers 1211, Department of Applied Economics II, Universidad de Valencia.
- Paz Coscollá-Girona & Pilar Beneito López & Amparo Sanchis Llopis & María Engracia Rochina Barrachina, 2011. "Competitive pressure determinants and innovation at the firm level," Working Papers. Serie EC 2011-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
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