Competition & Innovation: New Evidence from US Patent and Productivity Data
24 Pages Posted: 21 Oct 2011 Last revised: 29 Dec 2013
Date Written: October 21, 2011
Abstract
Is there any evidence that innovation and technological progress are contained by competition and fostered by monopoly power? Our results based on a newly constructed dataset of US manufacturing industries observed over two decades suggest that this is not the case.
On the contrary, using both patent statistics and productivity growth as alternative measures of innovation and technical change, we observe faster technological advances in more competitive markets. These results are robust to changes in the econometric techniques used to model nonlinearity in the competition-innovation relationship and to the inclusion of non-manufacturing industries in the estimation sample.
Keywords: innovation, patents, productivity, competition
JEL Classification: D43, L11, O31
Suggested Citation: Suggested Citation
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