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The Effect of Market Entry on Innovation: Evidence from UK University Incubators

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  • Christian Helmers

Abstract

This paper investigates the effect of market entry of new firms on incumbent firms' innovative activity measured as patent applications. The basic assumption is that the effect of entry varies by geographical distance between entrants and incumbents due to the presence of localized unobserved spillovers. In order to avoid endogeneity problems commonly associated with the timing of entry and entrants' location choice, I analyze entry induced by the establishment of university business incubators, which are usefully exogenous in time and space. The results show that entry has a statistically and economically significantly positive strategic effect on incumbent patenting which is attenuated by the geographical distance between entrant and incumbent.

Suggested Citation

  • Christian Helmers, 2010. "The Effect of Market Entry on Innovation: Evidence from UK University Incubators," CEP Discussion Papers dp1002, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1002
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    Keywords

    Patents; market entry; incubators; spillover;

    JEL classification:

    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • 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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