Competition and Persistence of R&D
Swiss Federal Institute of Technology Zurich (ETH) - Swiss Institute for Business Cycle Research (KOF)
November 10, 2011
KOF Working Papers No. 290
This paper investigates the R&D persistence of R&D active firms in different markets with different intensities of competition, based on firm-level panel data for the period 1996-2008. In a dynamic setting of the empirical model it turns out that persistence is strongly related to market competition (measured by the number of principal competitors). Persistence of R&D expenditures is more likely to be observed in markets with few principal competitors (between 6 and 10) and is very unlikely to be observed in polypolistic type of markets (more than 50 competitors). These results call for a stronger coordination between competition policy and innovation promotion policy, since the former basically aims at larger markets with many competitors, while the latter aims at persistence of R&D efforts and thus markets with fewer competitors.
Number of Pages in PDF File: 29
Keywords: R&D expenditures, persistence, innovation, competition, panel data, empirical investigation
JEL Classification: O30working papers series
Date posted: November 18, 2011
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