Competition and Product Development Innovation: The Case of Newly Launched Trademarks
Posted: 15 Jul 2019
Date Written: October 3, 2018
This paper examines the relationship between competition and product development innovation using the U.S. trademark database. We find that greater import competition spurs corporate product innovation measured by newly-launched trademarks. However, such increase in foreign competition significantly decreases the new product trademarks survival rate. Moreover, as reflected by lower trademark diversity and more exploitation trademarks, firms tend to launch new brands in old and familiar areas in response to intensified import competition. We find similar results when using common domestic competition measures. Overall, our results suggest that competitive markets can promote product innovation.
Keywords: trademark; product market competition; import competition; innovation
JEL Classification: L10, O31, O32
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