Market Power, Governance and Innovation: OECD Evidence
The aim of this paper is to investigate the relationship between market power, governance and patenting activity in a sample of 25 OECD countries from 1988-2007. Controlling for a wide range of innovation predictors, we report that governance quality is related positively with patenting activity in the full sample and in samples of countries with higher-than-average per-capita GDP, governance scores and economic openness. Secondly, the relationship between market power and innovation has a U-shape in the full sample, but inverted-U shape in split samples. Third, when interacted with governance, market power tends to have an offsetting effect that weakens the positive relationship between governance and innovation. These findings are robust to a range of control variables such as per-capita GDP, income inequality, depth of equity markets, labour share in national income, economic globalization and military expenditures. Our findings indicate that governance is a significant factor that explain innovation and that blanket statements about the relationship between competition and innovation as well as the kind of reforms necessary to foster innovation can be misleading.
|Date of creation:||Nov 2012|
|Date of revision:|
|Contact details of provider:|| Postal: |
Web page: https://mpra.ub.uni-muenchen.de
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edinaldo Tebaldi & Bruce Elmslie, 2013. "Does institutional quality impact innovation? Evidence from cross-country patent grant data," Applied Economics, Taylor & Francis Journals, vol. 45(7), pages 887-900, March.
- Galor, Oded & Tsiddon, Daniel, 1996.
"Technological Progress, Mobility, and Economic Growth,"
CEPR Discussion Papers
1413, C.E.P.R. Discussion Papers.
- Galor, Oded & Tsiddon, Daniel, 1997. "Technological Progress, Mobility, and Economic Growth," American Economic Review, American Economic Association, vol. 87(3), pages 363-82, June.
- Galor, O. & Tsiddon, D., 1996. "Technological Progress, Mobility and Economic Growth," Papers 13-96, Tel Aviv.
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002.
"Competition and Innovation: An Inverted U Relationship,"
NBER Working Papers
9269, National Bureau of Economic Research, Inc.
- Philippe Aghion & Nick Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2005. "Competition and Innovation: An Inverted-U Relationship," The Quarterly Journal of Economics, MIT Press, vol. 120(2), pages 701-728, May.
- Howitt, Peter & Griffith, Rachel & Aghion, Philippe & Blundell, Richard & Bloom, Nick, 2005. "Competition and Innovation: An Inverted-U Relationship," Scholarly Articles 4481507, Harvard University Department of Economics.
- Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and innovation: an inverted U relationship," IFS Working Papers W02/04, Institute for Fiscal Studies.
- Acemoglu, Daron & Antras, Pol & Helpman, Elhanan, 2007.
"Contracts and Technology Adoption,"
3199063, Harvard University Department of Economics.
- Griffith, Rachel & Harrison, Rupert & Simpson, Helen, 2006.
"Product Market Reform and Innovation in the EU,"
CEPR Discussion Papers
5849, C.E.P.R. Discussion Papers.
- Baldwin, John R., 2004.
"Trade Liberalization: Export-market Participation, Productivity Growth and Innovation,"
Economic Analysis (EA) Research Paper Series
2004027e, Statistics Canada, Analytical Studies Branch.
- John R. Baldwin & Wulong Gu, 2004. "Trade Liberalization: Export-market Participation, Productivity Growth, and Innovation," Oxford Review of Economic Policy, Oxford University Press, vol. 20(3), pages 372-392, Autumn.
- Francisco Rodriguez & Arjun Jayadev, 2010. "The Declining Labor Share of Income," Human Development Research Papers (2009 to present) HDRP-2010-36, Human Development Report Office (HDRO), United Nations Development Programme (UNDP).
- Faber, Jan & Hesen, Anneloes Barbara, 2004. "Innovation capabilities of European nations: Cross-national analyses of patents and sales of product innovations," Research Policy, Elsevier, vol. 33(2), pages 193-207, March.
- James R. Brown & Steven M. Fazzari & Bruce C. Petersen, 2009. "Financing Innovation and Growth: Cash Flow, External Equity, and the 1990s R&D Boom," Journal of Finance, American Finance Association, vol. 64(1), pages 151-185, 02.
- Reinganum, Jennifer R., 1982.
"Uncertain Innovation and the Persistence of Monopoly,"
431, California Institute of Technology, Division of the Humanities and Social Sciences.
- Reinganum, Jennifer F, 1983. "Uncertain Innovation and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 73(4), pages 741-48, September.
- Axel Dreher, 2005.
"Does Globalization Affect Growth? Evidence from a new Index of Globalization,"
TWI Research Paper Series
6, Thurgauer Wirtschaftsinstitut, Universitï¿½t Konstanz.
- Axel Dreher, 2006. "Does globalization affect growth? Evidence from a new index of globalization," Applied Economics, Taylor & Francis Journals, vol. 38(10), pages 1091-1110.
- Gilbert, Richard J & Newbery, David M G, 1982. "Preemptive Patenting and the Persistence of Monopoly," American Economic Review, American Economic Association, vol. 72(3), pages 514-26, June.
- Vassilis Tselios, 2011. "Is Inequality Good for Innovation?," International Regional Science Review, , vol. 34(1), pages 75-101, January.
- Jose V. Rodriguez Mora & John Hassler, 2000. "Intelligence, Social Mobility, and Growth," American Economic Review, American Economic Association, vol. 90(4), pages 888-908, September.
- Guloglu, Bulent & Tekin, R. Baris & Saridogan, Ercan, 2012. "Economic determinants of technological progress in G7 countries: A re-examination," Economics Letters, Elsevier, vol. 116(3), pages 604-608.
- Knack, Stephen & Keefer, Philip, 1997. "Does Social Capital Have an Economic Payoff? A Cross-Country Investigation," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1251-88, November.
- Gregorio Gimenez & Jaime Sanau, 2007. "Interrelationship among institutional infrastructure, technological innovation and growth. An empirical evidence," Applied Economics, Taylor & Francis Journals, vol. 39(10), pages 1267-1282.
- Daron Acemoglu, 2006. "A Simple Model of Inefficient Institutions," Scandinavian Journal of Economics, Wiley Blackwell, vol. 108(4), pages 515-546, December.
- George R. G. Clarke, 2001. "How institutional quality and economic factors impact technological deepening in developing countries," Journal of International Development, John Wiley & Sons, Ltd., vol. 13(8), pages 1097-1118.
- Weinhold, Diana & Nair-Reichert, Usha, 2009.
"Innovation, Inequality and Intellectual Property Rights,"
Elsevier, vol. 37(5), pages 889-901, May.
- Diana Weinhold & Usha Nair- Reichert, 2004. "Innovation, Inequality and Intellectual Property Rights," Development and Comp Systems 0410002, EconWPA, revised 04 Nov 2004.
- Taskin, Fatma & Zaim, Osman, 1997. "Catching-up and innovation in high- and low-income countries," Economics Letters, Elsevier, vol. 54(1), pages 93-100, January.
- Hélène Dernis & Mosahid Khan, 2004. "Triadic Patent Families Methodology," OECD Science, Technology and Industry Working Papers 2004/2, OECD Publishing.
- Stiglitz, Joseph E & Weiss, Andrew, 1981. "Credit Rationing in Markets with Imperfect Information," American Economic Review, American Economic Association, vol. 71(3), pages 393-410, June.
- Morris Altman, 2009. "A Behavioral-Institutional Model of Endogenous Growth and Induced Technical Change," Journal of Economic Issues, M.E. Sharpe, Inc., vol. 43(3), pages 685-714, September.
- Rachel Griffith & Rupert Harrison & Helen Simpson, 2006. "The link between product market reform, innovation and EU macroeconomic performance," European Economy - Economic Papers 243, Directorate General Economic and Financial Affairs (DG ECFIN), European Commission.
- Michael Polder & Erik Veldhuizen, 2012. "Innovation and Competition in the Netherlands: Testing the Inverted-U for Industries and Firms," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 67-91, March.
- Michael Peneder, 2012. "Competition and Innovation: Revisiting the Inverted-U Relationship," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 1-5, March.
- Bergh, Andreas & Nilsson, Therese, 2010. "Do liberalization and globalization increase income inequality?," European Journal of Political Economy, Elsevier, vol. 26(4), pages 488-505, December.
- Akerlof, George A & Yellen, Janet L, 1990. "The Fair Wage-Effort Hypothesis and Unemployment," The Quarterly Journal of Economics, MIT Press, vol. 105(2), pages 255-83, May.
- Pla-Barber, José & Alegre, Joaquín, 2007. "Analysing the link between export intensity, innovation and firm size in a science-based industry," International Business Review, Elsevier, vol. 16(3), pages 275-293, June.
- Chiara Peroni & Ivete Ferreira, 2012. "Competition and Innovation in Luxembourg," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 93-117, March.
- F. M. Scherer & Dietmar Harhoff & J, rg Kukies, 2000. "Uncertainty and the size distribution of rewards from innovation," Journal of Evolutionary Economics, Springer, vol. 10(1), pages 175-200.
- Frederick Solt, 2009. "Standardizing the World Income Inequality Database," Social Science Quarterly, Southwestern Social Science Association, vol. 90(2), pages 231-242.
- Charles Bérubé & Marc Duhamel & Daniel Ershov, 2012. "Market Incentives for Business Innovation: Results from Canada," Journal of Industry, Competition and Trade, Springer, vol. 12(1), pages 47-65, March.
- Guan, Jiancheng & Chen, Kaihua, 2012. "Modeling the relative efficiency of national innovation systems," Research Policy, Elsevier, vol. 41(1), pages 102-115.
When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:44141. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht)
If references are entirely missing, you can add them using this form.