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Product Market Competition and Innovation: What Can We Learn from Economic Theory?

Author

Listed:
  • Zhiqi Chen

    (Department of Economics, Carleton University, Ottawa, K1S 5B6, Canada)

Abstract

By means of a literature review, this paper strives to provide some clarity on the much-debated relationship between product market competition and firms¡¯ incentives to innovate. It shows that in the literature there does not exist a robust relationship between competition and incentives to innovate. Therefore, it would be futile to continue the debate over whether competition stimulates or hinders innovation. A more useful approach is to make a distinction between pre-innovation competition and post-innovation competition, as it provides a way for reconciling many of the seemingly contradictory findings from the literature. Another important insight from the literature is that the relationship between competition and innovation depends on the source of increased competition.

Suggested Citation

  • Zhiqi Chen, 2017. "Product Market Competition and Innovation: What Can We Learn from Economic Theory?," Frontiers of Economics in China-Selected Publications from Chinese Universities, Higher Education Press, vol. 12(3), pages 450-464, September.
    • Handle: RePEc:fec:journl:v:12:y:2017:i:3:p:450-464
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    File URL: http://journal.hep.com.cn/fec/EN/10.3868/s060-006-017-0019-2
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    Citations

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    Cited by:

    1. Liliana Meza-González & Jaime Marie Sepulveda, 2019. "The impact of competition with China in the US market on innovation in Mexican manufacturing firms," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-21, December.

    More about this item

    Keywords

    innovation; product market competition; incentive;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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