Competition Policy and Market Leaders

Maçi, Ilir; Žigić, Krešimir

doi:10.2139/ssrn.1483201

Cited by 3 publications

(2 citation statements)

References 13 publications

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“…It is remarkable that this result is now presented in terms of the R&D/sales ratio, which is exactly the dependent variable used in our empirical analysis. More generally, as shown also by Maci and Žigić () and Kováč et al . (), the leadership always generates strategic overinvestment in R&D relative to sales when entry is endogenous.…”

Section: A Model Of Randd Investmentsupporting

confidence: 71%

Endogenous Market Structures and Innovation by Leaders: An Empirical Test

2013

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Models of competition for the market with endogenous market structures show that, contrary to the Arrow view, an endogenous entry threat induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions using a unique dataset for the German manufacturing sector (the Mannheim Innovation Panel). In line with our predictions, endogenous entry threats as perceived by the firms (in survey data) reduce R&D intensity for an average firm, but they increase it for an incumbent leader. These results hold after a number of robustness tests with instrumental variable regressions.

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Section: A Model Of Randd Investmentsupporting

confidence: 71%

Endogenous Market Structures and Innovation by Leaders: An Empirical Test

2013

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“…It is remarkable that this result is now presented in terms of the R&D/sales ratio, which is exactly the dependent variable used in our empirical analysis. More generally, as shown also by Maci and Zigi c (2011) and Kov a c et al (2010), the leadership always generates strategic overinvestment in R&D relative to sales when entry is endogenous.…”

Section: Strategic Investment In Randdmentioning

confidence: 67%

Endogenous Market Structures and Innovation by Leaders: An Empirical Test

2011

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The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence

2008

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We develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average rm to invest less in R&D and the incumbent leader to invest more than the average rm. We test these predictions with a Tobit model based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). In line with our predictions, endogenous entry threats perceived by the rms reduce R&D intensity for the average rm, but not for an incumbent leader. Moreover, the size of the rms and their patent stocks, proxy for the protection of IPRs, are positively related to R&D intensity. These results hold after a number of robustness tests with instrumental variables.JEL{Classi cation: O31, O32

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Competition Policy and Market Leaders

Cited by 3 publications

References 13 publications

Endogenous Market Structures and Innovation by Leaders: An Empirical Test

Endogenous Market Structures and Innovation by Leaders: An Empirical Test

Endogenous Market Structures and Innovation by Leaders: An Empirical Test

The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence

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