Universität zu Köln

Aghion, Philippe, Bechtold, Stefan, Cassar, Lea and Herz, Holger (2018). The Causal Effects of Competition on Innovation: Experimental Evidence. J. Law Econ. Organ., 34 (2). S. 162 - 196. CARY: OXFORD UNIV PRESS INC. ISSN 1465-7341

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Abstract

We design two laboratory experiments to analyze the causal effects of competition on step-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by the ex post rents for firms that operate at the same technological level, that is, for neck-and-neck firms. First, we find that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased competition decreases R&D investments by firms that are lagging behind, in particular if the time horizon is short. Third, we find that increased competition affects industry composition by reducing the fraction of sectors where firms are neck-and-neck. All these results are consistent with the predictions of step-by-step innovation models.

Item Type:	Journal Article
Creators:	Creators Email ORCID ORCID Put Code Aghion, Philippe UNSPECIFIED UNSPECIFIED UNSPECIFIED Bechtold, Stefan UNSPECIFIED UNSPECIFIED UNSPECIFIED Cassar, Lea UNSPECIFIED UNSPECIFIED UNSPECIFIED Herz, Holger UNSPECIFIED UNSPECIFIED UNSPECIFIED
URN:	urn:nbn:de:hbz:38-187749
DOI:	10.1093/jleo/ewy004
Journal or Publication Title:	J. Law Econ. Organ.
Volume:	34
Number:	2
Page Range:	S. 162 - 196
Date:	2018
Publisher:	OXFORD UNIV PRESS INC
Place of Publication:	CARY
ISSN:	1465-7341
Language:	English
Faculty:	Unspecified
Divisions:	Unspecified
Subjects:	no entry
Uncontrolled Keywords:	Keywords Language RESEARCH-AND-DEVELOPMENT; BY-STEP INNOVATION; MARKET-STRUCTURE; CLUSTERED DATA; COOPERATION; EVOLUTION; GROWTH; FIRMS Multiple languages Economics; Law Multiple languages
Refereed:	Yes
URI:	http://kups.ub.uni-koeln.de/id/eprint/18774