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

23 Pages Posted: 5 Dec 2002

See all articles by Sandra Gottschalk

Sandra Gottschalk

Center for European Economic Research (ZEW)

Norbert Janz

Center for European Economic Research (ZEW); Aachen University of Applied Science - Department of Business Studies

Date Written: July 15, 2001

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.

Keywords: innovation, R&D, market structure, panel data, dynamic models, applied econometrics

JEL Classification: O31, L11, C33, L60

Suggested Citation

Gottschalk, Sandra and Janz, Norbert, Innovation Dynamics and Endogenous Market Structure Econometric Results from Aggregated Survey Data (July 15, 2001). ZEW Discussion Paper No. 01-39, Available at SSRN: https://ssrn.com/abstract=331061 or http://dx.doi.org/10.2139/ssrn.331061

Sandra Gottschalk (Contact Author)

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Norbert Janz

Center for European Economic Research (ZEW) ( email )

P.O. Box 10 34 43
L 7,1 D-68161 Mannheim
Germany

Aachen University of Applied Science - Department of Business Studies ( email )

Eupener Str. 70
D-52056 Aachen
Germany

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