The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence
AbstractWe develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions with a Tobit model based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). We confirm the empirical validity of our predictions and perform a number of robustness test with instrumental variables. --
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Bibliographic InfoPaper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 08-078.
Date of creation: 2008
Date of revision:
R&D; Entry; Endogenous market structures; Leadership;
Other versions of this item:
- Dirk Czarnitzki & Federico Etro & Kornelius Kraft, 2009. "The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence," Working Papers 163, University of Milano-Bicocca, Department of Economics, revised May 2009.
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O31 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-01-03 (All new papers)
- NEP-COM-2009-01-03 (Industrial Competition)
- NEP-CSE-2009-01-03 (Economics of Strategic Management)
- NEP-ENT-2009-01-03 (Entrepreneurship)
- NEP-INO-2009-01-03 (Innovation)
- NEP-MIC-2009-01-03 (Microeconomics)
- NEP-TID-2009-01-03 (Technology & Industrial Dynamics)
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- Slivko, Olga & Theilen, Bernd, 2011.
"Innovation or Imitation? The effect of spillovers and competitive pressure on firms' R&D strategy choice,"
2072/179618, Universitat Rovira i Virgili, Department of Economics.
- Olga Slivko & Bernd Theilen, 2014. "Innovation or imitation? The effect of spillovers and competitive pressure on firms’ R&D strategy choice," Journal of Economics, Springer, vol. 112(3), pages 253-282, July.
- Ilir Maçi & Kresimir Zigic, 2008.
"Competition Policy and Market Leaders,"
CERGE-EI Working Papers
wp375, The Center for Economic Research and Graduate Education - Economic Institute, Prague.
- Slivko, Olga, 2012. "Innovation strategies of German firms: The effect of competition and intellectual property protection," ZEW Discussion Papers 12-089, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
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