Competition and Innovation in Markets for Technology

65 Pages Posted: 9 Mar 2014 Last revised: 17 Nov 2022

See all articles by Jean-Etienne de Bettignies

Jean-Etienne de Bettignies

University of Toronto - Rotman School of Management; University of Toronto at Scarborough - Division of Management

Hua Fang Liu

City University of NY, Baruch College, Zicklin School of Business

David T. Robinson

Fuqua School of Business, Duke University; National Bureau of Economic Research (NBER); Duke Innovation & Entrepreneurship Initiative

Bulat Gainullin

affiliation not provided to SSRN

Multiple version iconThere are 2 versions of this paper

Date Written: June 22, 2022

Abstract

We examine the impact of product market competition on innovation in markets for technology. An innovator makes an investment in quality-improving innovation that can be licensed to one (targeted licensing) or all (market-wide licensing) product market competitors. Our model points to a U-shaped relationship between competition in licensee product markets and innovation in the market for technology: at low levels of competition, market-wide licensing is optimal and competition reduces innovation, while at high levels of competition targeted licensing is optimal and competition increases innovation. Empirical analysis using a large panel of U.S. data provides clear support for these predictions linking competition, innovation and licensing.

Keywords: Competition, Licensing, Innovation, Import Tariffs

JEL Classification: L22, L24, O31, O32

Suggested Citation

de Bettignies, Jean-Etienne and Liu, Hua Fang and Robinson, David T. and Gainullin, Bulat, Competition and Innovation in Markets for Technology (June 22, 2022). Available at SSRN: https://ssrn.com/abstract=2400839 or http://dx.doi.org/10.2139/ssrn.2400839

Jean-Etienne De Bettignies (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4
Canada

University of Toronto at Scarborough - Division of Management

1265 Military Trial
Scarborough, Ontario M1C 1A4
Canada

Hua Fang Liu

City University of NY, Baruch College, Zicklin School of Business ( email )

One Bernard Baruch Way
New York, NY 10010
United States

David T. Robinson

Fuqua School of Business, Duke University ( email )

100 Fuqua Drive
Durham, NC 27708-0120
United States
919-660-8023 (Phone)

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Duke Innovation & Entrepreneurship Initiative ( email )

215 Morris St., Suite 300
Durham, NC 27701
United States

Bulat Gainullin

affiliation not provided to SSRN

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