Product Market Competition and Long-Term Firm Value: Evidence from Reverse Engineering Laws

80 Pages Posted: 22 Nov 2017 Last revised: 8 Oct 2018

See all articles by Scott B. Guernsey

Scott B. Guernsey

University of Cambridge - Judge Business School

Date Written: October 3, 2018

Abstract

I analyze the value impact of product market competition (PMC) on long-term firm value. Using exogenous state adoption of anti-plug-mold statutes, and their subsequent invalidation, I causally show that decreased PMC generates economically and statistically significant long-term firm value, especially for firms at heightened risk of product imitation or with greater innovative ability. My findings are robust to an array of falsification tests directly aimed at ruling out the possibility of unobserved sources of local variation confounding the analysis and provide support for the view that a reduction in PMC leads to higher firm value by increasing innovation incentives.

Keywords: product market competition, firm value, reverse engineering, intellectual property protection, innovation, Anti-Plug-Mold statutes

JEL Classification: G32, K22, O31, O32, O34

Suggested Citation

Guernsey, Scott B., Product Market Competition and Long-Term Firm Value: Evidence from Reverse Engineering Laws (October 3, 2018). Available at SSRN: https://ssrn.com/abstract=3074622 or http://dx.doi.org/10.2139/ssrn.3074622

Scott B. Guernsey (Contact Author)

University of Cambridge - Judge Business School ( email )

Trumpington Street
Cambridge, CB2 1AG
United Kingdom

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