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on Technology and Industrial Dynamics |
| By: | Michael Peneder (WIFO); Martin Wörter |
| Abstract: | To address the relationship between innovation and competition we jointly estimate the opportunity, production, and impact functions of innovation in a simultaneous system. Based on Swiss micro-data, we apply a 3-SLS system estimation. The findings confirm a robust inverted-U relationship, in which a rise in the number of competitors at low levels of initial competition increases the firm's research effort, but at a diminishing rate, and the research effort ultimately decreases at high levels of competition. When we split the sample by firm types, the inverted-U shape is steeper for creative firms than for adaptive ones. The numerical solution indicates three particular configurations of interest: 1. an uncontested monopoly with low innovation, 2. low competition with high innovation, and 3. a "no innovation trap" at very high levels of competition. The distinction between solution 1. and 2. corresponds to Arrow's positive effect of competition on innovation, whereas the difference between outcomes 2. and 3. captures Schumpeter's positive effect of market power on innovation. Simulating changes of the exogenous variables, technology potential, demand growth, firm size and exports have a positive impact on innovation, while foreign ownership has a negative effect, and higher appropriability has a positive impact on the number of competitors. |
| Date: | 2013–03–22 |
| URL: | http://d.repec.org/n?u=RePEc:wfo:wpaper:y:2013:i:448&r=tid |
| By: | Carolina Castaldi; Koen Frenken; Bart Los |
| Abstract: | We investigate how variety affects the innovation output of a region. Borrowing arguments from theories of recombinant innovation, we expect that related variety will enhance innovation as related technologies are more easily recombined into a new technology. However, we also expect that unrelated variety enhances technological breakthroughs, since radical innovation often stems from connecting previously unrelated technologies opening up whole new functionalities and applications. Using patent data for US states in the period 1977-1999 and associated citation data, we find evidence for both hypotheses. Our study thus sheds a new and critical light on the related-variety hypothesis in economic geography. |
| Keywords: | recombinant innovation, regional innovation, superstar patents, technological variety, evolutionary economic geography |
| JEL: | O31 R11 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1302&r=tid |
| By: | Jeroen Hinloopen (University of Amsterdam); Grega Smrkolj (University of Amsterdam); Florian Wagener (University of Amsterdam) |
| Abstract: | We examine the trade-off between the benefits of allowing firms to cooperate in R&D and the corresponding increased potential for product market collusion. For that we utilize a dynamic model of R&D whereby we consider all possible initial marginal cost levels (technologies), including those that exceed the choke price. This global analysis yields four possibilities: initial marginal costs are above the choke price and this technology is, or is not, developed further, and initial marginal costs are below the choke price and the technology is, or is not, (eventually) taken off the market. We show that an extension of the cooperative agreement towards collusion in the product market is not necessarily welfare reducing: if firms collude, they (i) develop further a wider range of initial technologies, (ii) invest more in R&D such that process innovations are pursued more quickly, and (iii) abandon the technology for a smaller set of initial marginal costs. We also dis cuss the implications of our analysis for antitrust policy. |
| Keywords: | Antitrust policy; Bifurcations; Collusion; R&D cooperatives; Spillovers |
| JEL: | D43 D92 L13 L41 O31 O38 |
| Date: | 2013–03–15 |
| URL: | http://d.repec.org/n?u=RePEc:dgr:uvatin:20130045&r=tid |