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Cross-industry growth differences with asymmetric industries and endogenous market structure

Author

Listed:
  • Huang Chien-Yu

    (Institute of Urban Development, Nanjing Audit University, Nanjing, China)

  • Ji Lei

    (Sam Houston State University, Huntsville, TX, USA)

Abstract

We develop a two-industry R&D growth model with a free-entry endogenous market structure to evaluate the impact of industrial fundamentals on cross-industry differences of TFP growth and R&D intensity. Endogenous market structure in our model allows the firm’s market size to respond to the firm’s entry and exit which complements the models with an exogenous market structure in the previous literature. We find that surprisingly, an industry with a relatively high R&D productivity or appropriability exhibits “relatively” low in-house innovation growth and R&D intensity during transition. Moreoever, we examine the effects of R&D subsidies and patent breadth policies on industry differences by implementing both asymmetric and symmetric policy rules. We find that only asymmetric R&D subsidies have impacts on TFP growth and R&D intensity differences.

Suggested Citation

  • Huang Chien-Yu & Ji Lei, 2019. "Cross-industry growth differences with asymmetric industries and endogenous market structure," The B.E. Journal of Macroeconomics, De Gruyter, vol. 19(2), pages 1-18, June.
    • Handle: RePEc:bpj:bejmac:v:19:y:2019:i:2:p:18:n:3
    DOI: 10.1515/bejm-2017-0045
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    References listed on IDEAS

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    More about this item

    Keywords

    cross-industry TFP growth differences; endogenous growth; endogenous market structure;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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