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Patents, Competition, and Firms' Innovation Incentives

Author

Listed:
  • Pilar Beneito
  • María Engracia Rochina-Barrachina
  • Amparo Sanchis

Abstract

This paper presents fresh evidence on the interaction between industrial property rights (patents) and competition, and their joint effect on firms' innovation. We use panel data of Spanish manufacturing firms for 1990-2006, as well as external information on European Patent Office and US Patent Office patent counts. We construct a new synthetic measure of competition and estimate the impact of patents on this measure at the industry level. Then, the effect of industry-wide competition and patenting on firms' innovation is estimated at the firm level. Our results suggest that patents reduce the level of competition in the industry, whereas the effect of competition on innovation varies with the type of innovation indicator. Thus, by lowering competition, patents in an industry exert an indirect effect on innovation besides their direct effect. In addition, interaction effects between patents and competition indicate that patents soften the impact of competition changes on firms' innovation.

Suggested Citation

  • Pilar Beneito & María Engracia Rochina-Barrachina & Amparo Sanchis, 2014. "Patents, Competition, and Firms' Innovation Incentives," Industry and Innovation, Taylor & Francis Journals, vol. 21(4), pages 285-309, May.
  • Handle: RePEc:taf:indinn:v:21:y:2014:i:4:p:285-309
    DOI: 10.1080/13662716.2014.934546
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    References listed on IDEAS

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    Cited by:

    1. Basant, Rakesh, 2017. "Exploring Linkages between Innovation and public policy- challenges and Opportunities," IIMA Working Papers WP 2017-11-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
    2. repec:spr:epolit:v:35:y:2018:i:2:d:10.1007_s40888-018-0105-7 is not listed on IDEAS

    More about this item

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O34 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Intellectual Property and Intellectual Capital

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