Innovation Dynamics and Endogenous Market Structure : Econometric Results from Aggregated Survey Data

Gottschalk, Sandra ; Janz, Norbert

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URN: urn:nbn:de:bsz:180-madoc-4769
Document Type: Working paper
Year of publication: 2001
The title of a journal, publication series: None
Publication language: English
Institution: Sonstige Einrichtungen > ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung
MADOC publication series: Veröffentlichungen des ZEW (Leibniz-Zentrum für Europäische Wirtschaftsforschung) > ZEW Discussion Papers
Subject: 330 Economics
Classification: JEL: C33 L11 L60 O31 ,
Subject headings (SWD): Deutschland , Innovation , Marktstruktur , Forschung und Entwicklung
Abstract: This paper examines empirically the relationship between innovation and market structure within a simultaneous framework at the industry level of aggregation. We use a model in which R&D affects both, demand and cost conditions. An optimization process leads to optimal industry R&D expenditure and market structure in a symmetric equilibrium. The model is applied to a newly constructed panel for Germany. Generalized Method of Moments (GMM) estimation techniques for dynamic panel data systems are used to estimate the parameters of interest. We found a positive long–run effect of R&D on markets' sales concentration. In contrast, competition enforces innovation, i.e. sales concentration has a negative impact on R&D.
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