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 firm to invest less in R&D and the incumbent leader to invest more than the average firm. 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 firms reduce R&D intensity for the average firm, but not for an incumbent leader. Moreover, the size of the firms 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

Kraft, K., Etro, F., Czarnitzki, D. (2009). The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence [Working paper del dipartimento].

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

ETRO, FEDERICO;
2009

Abstract

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 firm to invest less in R&D and the incumbent leader to invest more than the average firm. 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 firms reduce R&D intensity for the average firm, but not for an incumbent leader. Moreover, the size of the firms 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
Working paper del dipartimento
Scientifica
R&D; Entry; Endogenous market structures; Leadership
English
Kraft, K., Etro, F., Czarnitzki, D. (2009). The Effect of Entry on R&D Investment of Leaders: Theory and Empirical Evidence [Working paper del dipartimento].
Kraft, K; Etro, F; Czarnitzki, D
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10281/23188
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