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Innovation dynamics and endogenous market structure: econometric results from aggregated survey data

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  • Gottschalk, Sandra
  • Janz, Norbert

Abstract

This paper examines empirically the relationship between innovation and market structure within a simultaneous framework at the industry level of aggregation. We use a model in which R&D affects both, demand and cost conditions. An optimization process leads to optimal industry R&D expenditure and market structure in a symmetric equilibrium. The model is applied to a newly constructed panel for Germany. Generalized Method of Moments (GMM) estimation techniques for dynamic panel data systems are used to estimate the parameters of interest. We found a positive long?run effect of R&D on markets? sales concentration. In contrast, competition enforces innovation, i.e. sales concentration has a negative impact on R&D.

Suggested Citation

  • Gottschalk, Sandra & Janz, Norbert, 2001. "Innovation dynamics and endogenous market structure: econometric results from aggregated survey data," ZEW Discussion Papers 01-39, ZEW - Leibniz Centre for European Economic Research.
    • Handle: RePEc:zbw:zewdip:5394
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    References listed on IDEAS

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    1. Hansen, Lars Peter, 1982. "Large Sample Properties of Generalized Method of Moments Estimators," Econometrica, Econometric Society, vol. 50(4), pages 1029-1054, July.
    2. Tom Lee & Louis L. Wilde, 1980. "Market Structure and Innovation: A Reformulation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 94(2), pages 429-436.
    3. Holtz-Eakin, Douglas, 1988. "Testing for individual effects in autoregressive models," Journal of Econometrics, Elsevier, vol. 39(3), pages 297-307, November.
    4. Harhoff, Dietmar, 1997. "Innovationsanreize in einem strukturellen Oligopolmodell," ZEW Discussion Papers 97-16, ZEW - Leibniz Centre for European Economic Research.
    5. Richard Levin & Peter C. Reiss, 1984. "Tests of a Schumpeterian Model of R&D and Market Structure," NBER Chapters, in: R&D, Patents, and Productivity, pages 175-208, National Bureau of Economic Research, Inc.
    6. Whitney Newey & Kenneth West, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
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    Cited by:

    1. Michael Peneder & Martin Woerter, 2014. "Competition, R&D and innovation: testing the inverted-U in a simultaneous system," Journal of Evolutionary Economics, Springer, vol. 24(3), pages 653-687, July.
    2. Bersch, Johannes & Wagner, Simona & Berger, Marius & Friedrich, Max, 2018. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2016: Gründungen und Schließungen von Unternehmen, Gründungsdynamik in den Bundesländern, Internationaler Vergleich, Wagniskapital-Investitionen in Deutschland und im internationalen Verglei," Studien zum deutschen Innovationssystem 3-2018, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    3. Wittkopp, Antje, 2002. "Marktstruktur, Innovationsaktivität und Profitabilität der deutschen Ernährungswirtschaft: Das Beispiel Functional Food," FE Working Papers 0205, Christian-Albrechts-University of Kiel, Department of Food Economics and Consumption Studies.
    4. Spyros Arvanitis & Juliette von Arx, 2004. "Innovation und Wettbewerb - Eine Analyse aufgrund von schweizerischen Unternehmensdaten," KOF Working papers 04-84, KOF Swiss Economic Institute, ETH Zurich.
    5. Tobias Stucki & Martin Woerter, 2019. "Competitive Pressure and Diversification into Green R&D," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 55(2), pages 301-325, September.
    6. Bersch, Johannes & Berger, Marius & Füner, Lena, 2022. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2020: Gründungen und Schließungen von Unternehmen, Gründungsdynamik in den Bundesländern, Internationaler Vergleich, Wagniskapital-Investitionen in Deutschland und im internationalen Verglei," Studien zum deutschen Innovationssystem 3-2022, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    7. Bersch, Johannes & Berger, Marius & Egeln, Jürgen, 2020. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2018: Gründungen und Schließungen von Unternehmen, Gründungsdynamik in den Bundesländern, Internationaler Vergleich, Wagniskapital-Investitionen in Deutschland und im internationalen Verglei," Studien zum deutschen Innovationssystem 3-2020, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    8. Katja Görlitz & Joel Stiebale, 2011. "The Impact of Product Market Competition on Employers’ Training Investments. Evidence from German Establishment Panel Data," De Economist, Springer, vol. 159(1), pages 1-23, March.
    9. Bersch, Johannes & Gottschalk, Sandra & Müller, Bettina & Wagner, Simona & Weiß, Anna, 2016. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2014: Gründungen und Schließungen von Unternehmen, Gründungsdynamik in den Bundesländern, internationaler Vergleich, Akquisition von jungen Unternehmen als Innovationsstrategie," Studien zum deutschen Innovationssystem 3-2016, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    10. Rammer, Christian & Metzger, Georg, 2010. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland und im internationalen Vergleich," Studien zum deutschen Innovationssystem 10-2010, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    11. Rammer, Christian, 2007. "Unternehmensdynamik in den forschungsund wissensintensiven Wirtschaftszweigen in Deutschland: Zur Entwicklung von Gründungen und Schließungen bis im internationalen Vergleich 1995-2006," Studien zum deutschen Innovationssystem 5-2008, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    12. Lee, Chang-Yang, 2009. "Competition favors the prepared firm: Firms' R&D responses to competitive market pressure," Research Policy, Elsevier, vol. 38(5), pages 861-870, June.
    13. Rammer, Christian & Costard, Jano & Seliger, Florian & Schubert, Torben, 2008. "Bestimmungsgründe des Innovationserfolgs von baden-württembergischen KMU," ZEW Dokumentationen 08-05, ZEW - Leibniz Centre for European Economic Research.
    14. Bersch, Johannes & Murmann, Simona, 2023. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2021: Gründungen und Schließungen von Unternehmen, Gründungsdynamik in den Bundesländern, Internationaler Vergleich, Wagniskapital-Investitionen in Deutschland und im internationalen Verglei," Studien zum deutschen Innovationssystem 3-2023, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    15. Müller, Bettina & Bersch, Johannes & Niefert, Michaela & Rammer, Christian, 2013. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2011: Gründungen und Schließungen von Unternehmen – Internationaler Vergleich – Beschäftigungsbeitrag von Gründungen – Vergleich von Datenquellen mit Informationen zu Gründungen," Studien zum deutschen Innovationssystem 4-2013, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    16. Müller, Bettina & Gottschalk, Sandra & Niefert, Michaela & Rammer, Christian, 2014. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2012: Gründungen und Schließungen von Unternehmen – Gründungsdynamik in den Bundesländern – Internationaler Vergleich," Studien zum deutschen Innovationssystem 3-2014, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    17. Müller, Bettina & Rammer, Christian & Gottschalk, Sandra, 2012. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2010: Gründungen und Schließungen von Unternehmen. Internationaler Vergleich," Studien zum deutschen Innovationssystem 7-2012, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.
    18. Müller, Bettina & Niefert, Michaela & Rammer, Christian & Gottschalk, Sandra, 2011. "Unternehmensdynamik in der Wissenswirtschaft in Deutschland 2009: Gründungen und Schließungen von Unternehmen. Unternehmensdynamik in den Bundesländern. Internationaler Vergleich," Studien zum deutschen Innovationssystem 10-2011, Expertenkommission Forschung und Innovation (EFI) - Commission of Experts for Research and Innovation, Berlin.

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    Keywords

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    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives

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