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Industrial Concentration, Price-Cost Margins, and Innovation

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  • David Flath

Abstract

This paper explores a panel data set matching establishment-based production statistics from Japan's Census of Manufacturers with wholesale price indices from the Bank of Japan, and Herfindahl indices from the Japan Fair Trade Commission. The data include annual observations over the period 1961-1990, for 74 industries at the 4-digit s.i.c. level. We estimate Cobb-Douglas production functions and Solow residuals for each industry and then use these estimates to further analyze the determinates of industrial concentration and innovation. The industries having great capital intensity, small employment of labor, and with high price-cost margins tend to be more concentrated. Cross-section estimates reveal a U-shaped mapping from concentration to innovation.

Suggested Citation

  • David Flath, 2009. "Industrial Concentration, Price-Cost Margins, and Innovation," ISER Discussion Paper 0739, Institute of Social and Economic Research, The University of Osaka.
    • Handle: RePEc:dpr:wpaper:0739
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    Cited by:

    1. Masahito AMBASHI, 2013. "Does Competition Improve Industrial Productivity? An analysis of Japanese industries on the basis of the industry-level panel data," Discussion papers 13098, Research Institute of Economy, Trade and Industry (RIETI).
    2. Matsumura, Toshihiro & Matsushima, Noriaki & Cato, Susumu, 2013. "Competitiveness and R&D competition revisited," Economic Modelling, Elsevier, vol. 31(C), pages 541-547.
    3. Zhang, Peng & Yin, Guangzhi & Duan, Maosheng, 2020. "Distortion effects of emissions trading system on intra-sector competition and carbon leakage: A case study of China," Energy Policy, Elsevier, vol. 137(C).
    4. Masahito Ambashi, 2017. "Competition Effects and Industrial Productivity: Lessons from Japanese Industry," Asian Economic Papers, MIT Press, vol. 16(3), pages 212-249, Fall.
    5. Akihiko Yanase & Ngo Van Long, 2024. "Mixed Market Structure and R &D: A Differential Game Approach," Dynamic Games and Applications, Springer, vol. 14(1), pages 97-132, March.
    6. David Flath, 2010. "Are There Any Cournot Industries?," ISER Discussion Paper 0766, Institute of Social and Economic Research, The University of Osaka.

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