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Competition and Innovation - Microeconometric Evidence Using Finnish Data

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  • Juha Kilponen

    (Bank of Finland)

  • Torsten Santavirta

    (University of Helsinki)

Abstract

In this study we provide a theoretical prediction of a complementary relationship between the incentive effects of product market competition and R&D subsidies using the theory of Aghion et. al (1997, 2001). The complementarity relationship and that of an inverted U-relationship is then tested using a large Finnish firm level data set combined with patent and patent citations of the firms. Econometric analysis shows that the inverted U-relationship is fairly robust to different innovation measures derived from patent data. We also find that the inverted-U relationship tends to be steeper when also R&D subsidies are considered. This result suggests that there exists a complementarity between competition and R&D subsidies.

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File URL: http://128.118.178.162/eps/io/papers/0509/0509009.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Industrial Organization with number 0509009.

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Length: 100 pages
Date of creation: 16 Sep 2005
Date of revision:
Handle: RePEc:wpa:wuwpio:0509009

Note: Type of Document - pdf; pages: 100
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Web page: http://128.118.178.162

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Keywords: Product market competition; Innovations; R&D subsidies;

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References

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  29. repec:fth:harver:1473 is not listed on IDEAS
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Citations

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Cited by:
  1. Ad van Riet & Moreno Roma, 2006. "Competition, productivity and prices in the euro area services sector," Occasional Paper Series 44, European Central Bank.
  2. Valkonen, Laura, 2006. "Deregulation as a Means to Increase Competition and Productivity," Discussion Papers 1014, The Research Institute of the Finnish Economy.
  3. Juha Kilponen & Helvi Kinnunen & Antti Ripatti, 2006. "Demographic Uncertainty and Labour Market Imperfections in Small Open Economy," Computing in Economics and Finance 2006 227, Society for Computational Economics.
  4. Kilponen , Juha & Kinnunen , Helvi & Ripatti , Antti, 2006. "Population ageing in a small open economy – some policy experiments with a tractable general equilibrium model," Research Discussion Papers 28/2006, Bank of Finland.

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