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Patents, competition and firms’ innovation incentives

Author

Listed:
  • Pilar Beneito

    (University of Valencia and ERICES)

  • María E. Rochina-Barrachina

    (University of Valencia and ERICES)

  • Amparo Sanchis

    () (University of Valencia and ERICES)

Abstract

In this paper we analyze how industrial property rights (IPRs), measured by patents granted, affect competition at the industry level, and their induced effects on firms’ innovation incentives. We use for that purpose a panel dataset of Spanish manufacturing firms for the period 1990-2006. Using indicators of fundamentals of competitive pressure and factor analysis techniques, we construct a new synthetic measure of competition. Our results indicate that although the use of IPRs (in terms of industry patenting intensity) reduces market competition, it may also encourage firms’ innovation incentives (in terms of firms’ R&D expenditures and the number of product innovations).

Suggested Citation

  • Pilar Beneito & María E. Rochina-Barrachina & Amparo Sanchis, 2012. "Patents, competition and firms’ innovation incentives," Working Papers 1211, Department of Applied Economics II, Universidad de Valencia.
  • Handle: RePEc:eec:wpaper:1211
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    File URL: ftp://147.156.210.157/RePEc/pdf/eec_1211.pdf
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    References listed on IDEAS

    as
    1. Wörter, Martin & Rammer, Christian & Arvanitis, Spyros, 2010. "Innovation, competition and incentives for R&D," ZEW Discussion Papers 10-039, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    2. Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: an Inverted-U Relationship," The Quarterly Journal of Economics, Oxford University Press, pages 701-728.
    3. Paz Coscollá-Girona & Pilar Beneito López & Amparo Sanchis Llopis & María Engracia Rochina Barrachina, 2011. "Competitive pressure determinants and innovation at the firm level," Working Papers. Serie EC 2011-02, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    4. Jan Boone, 2000. "Competitive Pressure: The Effects on Investments in Product and Process Innovation," RAND Journal of Economics, The RAND Corporation, vol. 31(3), pages 549-569, Autumn.
    5. Christine Greenhalgh & Mark Rogers, 2007. "The Value of Intellectual Property Rights to Firms," Discussion Papers 06-036, Stanford Institute for Economic Policy Research.
    6. Boone, J. & van Ours, J.C. & van der Wiel, H.P., 2007. "How (Not) to Measure Competition," Discussion Paper 2007-32, Tilburg University, Center for Economic Research.
    7. Christian Helmers & Mark Rogers, 2009. "Patents, Entrepreneurship and Performance," Global COE Hi-Stat Discussion Paper Series gd09-095, Institute of Economic Research, Hitotsubashi University.
    8. Ganslandt, Mattias, 2008. "Intellectual Property Rights and Competition Policy," Working Paper Series 726, Research Institute of Industrial Economics.
    9. Béatrice Dumont & P. Holmes, 2002. "The breadth of intellectual property right and their interface with competition law and policy : divergent paths to the same goal," Post-Print halshs-00069688, HAL.
    Full references (including those not matched with items on IDEAS)

    Citations

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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.

    More about this item

    Keywords

    IPRs; patents; competition; innovation;

    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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