Robotizing to compete? Firm-level evidence

52 Pages Posted: 29 Nov 2023

See all articles by Paulo Bastos

Paulo Bastos

World Bank; Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE); ISEG Lisbon School of Economics and Management,Universidade de Lisboa

Lisandra Flach

Ludwig Maximilian University of Munich (LMU)

Klaus Keller

Max Planck Institute for Innovation and Competition

Date Written: November 28, 2023

Abstract

We investigate the impact of product market competition on firms’ automation investments. We use a rich combination of micro-data on Portuguese exporters and exploit a novel source of variation in the degree of competition they face – a tariff liberalization between the European Union and Central and Eastern European countries in the 1990s. We find that firms facing greater competition in export markets tend to reduce investments in automation technologies. These average negative effects are driven by the least productive firms, while the most efficient exporters in industries that are more prone to automation tend to robotize in order to compete. These findings suggest that an increase in the degree of product market competition widens disparities between firms.

Keywords: automation, product market competition, firm heterogeneity, trade liber- alization, workers, multi-product firms

JEL Classification: D22, F16, J23, L25, O33

Suggested Citation

Bastos, Paulo and Flach, Lisandra and Keller, Klaus, Robotizing to compete? Firm-level evidence (November 28, 2023). Max Planck Institute for Innovation & Competition Research Paper No. 23-23, Available at SSRN: https://ssrn.com/abstract=4647055 or http://dx.doi.org/10.2139/ssrn.4647055

Paulo Bastos

World Bank ( email )

Technical University of Lisbon (UTL) - Research Unit on Complexity and Economics (UECE) ( email )

Rua Miguel Lupi, 20
Lisboa, 1200-781
Portugal

ISEG Lisbon School of Economics and Management,Universidade de Lisboa ( email )

Rua do Quelhas 6
LISBOA, 1200-781
Portugal

Lisandra Flach

Ludwig Maximilian University of Munich (LMU) ( email )

Geschwister-Scholl-Platz 1
Munich, DE Bavaria 80539
Germany

Klaus Keller (Contact Author)

Max Planck Institute for Innovation and Competition ( email )

Marstallplatz 1
Munich, Bayern 80539
Germany

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