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This paper provides empirical evidence on the relationship between market competitive pressure and firms' innovation using panel data of Spanish manufacturing firms for 1990-2006. We depart from standard measures of competition, and construct variables capturing the fundamentals of competitive pressure (product substitutability, market size and entry costs) to test the theoretical predictions of Vives [2008, The Journal of Industrial Economics] for free entry. Our results line up favourably with these predictions. We obtain that greater product substitutability and higher costs of entry lead to more process innovation but less product innovation, whereas market enlargement spurs both product and process innovation.

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This paper presents theoretical and empirical evidence that an increase in tuition fees may boost university students' academic effort. We examine the tuition fee rise introduced in 2012 by Spanish universities, where students register and pay for their chosen modules and fees increase each time students retake a module until they pass it. Data refer to students of economics, business and medicine at the University of Valencia during 2010-2014. The fact that some students pay fees in full while others are exempt from payment provides an identifying source of variation that we exploit using a flexible difference-indifferences methodology.