IDEAS home Printed from https://ideas.repec.org/a/taf/ecinnt/v26y2017i1-2p150-167.html
   My bibliography  Save this article

Disentangling the effects of process and product innovation on cost and demand

Author

Listed:
  • Jordi Jaumandreu
  • Jacques Mairesse

Abstract

We explore in this note different structural models of the impact of process and product innovation on firms' demand and production cost functions. We find that the introduction of process and product innovations affects them differently as could be expected. Both product and process innovation shift forward the demand for the products of the firm. Process innovation reduces production marginal cost, but not always. A possibility, that we cannot prove or reject with the current specification of our models and available data, is that process innovation associated with product innovation raise marginal cost. Interestingly, we also find that advertising significantly augments demand but does not affect production marginal cost. To obtain broader conclusions, richer data will be needed allowing an enlargement of the model, in which process and product innovations could be specified distinctively and well identified.

Suggested Citation

  • Jordi Jaumandreu & Jacques Mairesse, 2017. "Disentangling the effects of process and product innovation on cost and demand," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 26(1-2), pages 150-167, February.
    • Handle: RePEc:taf:ecinnt:v:26:y:2017:i:1-2:p:150-167
    DOI: 10.1080/10438599.2016.1205276
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/10438599.2016.1205276
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/10438599.2016.1205276?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    2. Bronwyn H. Hall & Nathan Rosenberg (ed.), 2010. "Handbook of the Economics of Innovation," Handbook of the Economics of Innovation, Elsevier, edition 1, volume 1, number 1.
    3. Jordi Jaumandreu & Jacques Mairesse, 2010. "Innovation and Welfare: Results from Joint Estimation of Production and Demand Functions," NBER Working Papers 16221, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ioannis Giotopoulos & Alexander S. Kritikos & Aggelos Tsakanikas, 2023. "A lasting crisis affects R&D decisions of smaller firms: the Greek experience," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1161-1175, August.
    2. Liang, Ting & Zhang, Yue-Jun & Qiang, Wei, 2022. "Does technological innovation benefit energy firms’ environmental performance? The moderating effect of government subsidies and media coverage," Technological Forecasting and Social Change, Elsevier, vol. 180(C).
    3. María García-Vega & Óscar Vicente-Chirivella, 2020. "The effect of technology transfers from public research institutes and universities on firm innovativeness," Discussion Papers 2020-10, University of Nottingham, GEP.
    4. Jordi Jaumandreu & Shuheng Lin, 2018. "Prices under Innovation: Evidence from Manufacturing Firms," Working Papers 2019-07-04, Wang Yanan Institute for Studies in Economics (WISE), Xiamen University.
    5. Wadho, Waqar & Chaudhry, Azam, 2024. "Measuring process innovation outputs and understanding their implications for firms and workers: Evidence from Pakistan," Technovation, Elsevier, vol. 136(C).
    6. de Miguel, Carlos & Pazó, Consuelo, 2017. "Environmental protection, innovation and price-setting behavior in Spanish manufacturing firms," Energy Economics, Elsevier, vol. 68(S1), pages 116-124.
    7. Mohnen, Pierre, 2019. "R&D, innovation and productivity," MERIT Working Papers 2019-016, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Schubert, Torben & Ashouri, Sajad & Deschryvere, Matthias & Jäger, Angela & Visentin, Fabiana & Cunningham, Scott & Hajikhani, Arash & Pukelis, Lukas & Suominen, Arho, 2023. "The role of product digitization for productivity," MERIT Working Papers 2023-004, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    9. Rammer, Christian, 2023. "Measuring process innovation output in firms: Cost reduction versus quality improvement," Technovation, Elsevier, vol. 124(C).
    10. Edeh, Jude N. & Acedo, Francisco J., 2021. "External supports, innovation efforts and productivity: Estimation of a CDM model for small firms in developing countries," Technological Forecasting and Social Change, Elsevier, vol. 173(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Banal-Estañol, Albert & Duso, Tomaso & Seldeslachts, Jo & Szücs, Florian, 2022. "R&D spillovers through RJV cooperation," Research Policy, Elsevier, vol. 51(4).
    2. Deleidi, Matteo & Mazzucato, Mariana & Semieniuk, Gregor, 2020. "Neither crowding in nor out: Public direct investment mobilising private investment into renewable electricity projects," Energy Policy, Elsevier, vol. 140(C).
    3. Sarah Demeulemeester & Hanna Hottenrott, 2015. "R&D subsidies and firms' cost of debt," Working Papers of Department of Management, Strategy and Innovation, Leuven 516028, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    4. Emiko Inoue, 2015. "An empirical analysis on the relationship between emissions trading system and R&D investment," Discussion papers e-15-008, Graduate School of Economics , Kyoto University.
    5. Schwab, Thomas & Todtenhaupt, Maximilian, 2021. "Thinking outside the box: The cross-border effect of tax cuts on R&D," Journal of Public Economics, Elsevier, vol. 204(C).
    6. Spyros Arvanitis & Michael Peneder & Christian Rammer & Tobias Stucki & Martin Wörter, 2016. "The adoption of green energy technologies: The role of policies in an international comparison," KOF Working papers 16-411, KOF Swiss Economic Institute, ETH Zurich.
    7. Schubert, Torben & Jäger, Angela & Türkeli, Serdar & Visentin, Fabiana, 2020. "Addressing the productivity paradox with big data: A literature review and adaptation of the CDM econometric model," MERIT Working Papers 2020-050, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
    8. Cristiano Antonelli & Alessandra Colombelli, 2017. "The locus of knowledge externalities and the cost of knowledge," Regional Studies, Taylor & Francis Journals, vol. 51(8), pages 1151-1164, August.
    9. Tsakanikas, Aggelos & Caloghirou, Yannis & Dimas, Petros & Stamopoulos, Dimitrios, 2022. "Intangibles, innovation, and sector specialization in global value chains: A case study on the EU's and the UK's manufacturing industries," Technological Forecasting and Social Change, Elsevier, vol. 177(C).
    10. Knoll, Bodo & Riedel, Nadine & Schwab, Thomas & Todtenhaupt, Maximilian & Voget, Johannes, 2021. "Cross-border effects of R&D tax incentives," Research Policy, Elsevier, vol. 50(9).
    11. Grashuis Jasper & Dary Stanley, 2019. "Patented Innovation and Firm Value in the U.S. Food and Drink Industry: The Economic Importance of High-Quality Product Innovation," Journal of Agricultural & Food Industrial Organization, De Gruyter, vol. 17(2), pages 1-14, November.
    12. Egger, Peter H. & Erhardt, Katharina & Keuschnigg, Christian, 2020. "Heterogeneous tax sensitivity of firm-level investments," Journal of Economic Behavior & Organization, Elsevier, vol. 176(C), pages 512-538.
    13. Misraku Molla Ayalew & Zhang Xianzhi & Yidersal Dagnaw Dinberu & Demis Hailegebreal Hailu, 2020. "The Determinants of Firm’s Innovation in Africa," Journal of Industry, Competition and Trade, Springer, vol. 20(3), pages 527-567, September.
    14. Spyros Arvanitis & Florian Seliger & Martin Wörter, 2016. "Knowledge Spillovers and their Impact on Innovation Success - A New Approach Using Patent Backward Citations," KOF Working papers 16-414, KOF Swiss Economic Institute, ETH Zurich.
    15. Sabrina Auci & Andrea Pronti, 2020. "Innovation in Irrigation Technologies for Sustainable Agriculture: An Endogenous Switching Analysis on Italian Farms’ Land Productivity," SEEDS Working Papers 1220, SEEDS, Sustainability Environmental Economics and Dynamics Studies, revised Dec 2020.
    16. Spyros Arvanitis & Florian Seliger & Martin Woerter, 2020. "Knowledge Spillovers, Competition and Innovation Success," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 82(5), pages 1017-1041, October.
    17. Aurelien Quignon, 2022. "Market Regulation and Innovation: Direct and Indirect Effects," Journal of Industry, Competition and Trade, Springer, vol. 22(3), pages 429-456, December.
    18. Francesco Lissoni, 2013. "Intellectual property and university–industry technology transfer," Chapters, in: Faïz Gallouj & Luis Rubalcaba & Paul Windrum (ed.), Public–Private Innovation Networks in Services, chapter 7, pages 164-194, Edward Elgar Publishing.
    19. Francisco Moris, 2018. "Intangibles Trade and MNEs: Supply-Chain Trade in R&D Services and Innovative Subsidiaries," Journal of Industry, Competition and Trade, Springer, vol. 18(3), pages 349-371, September.
    20. John Inekwe, 2015. "The Contribution of R&D Expenditure to Economic Growth in Developing Economies," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(3), pages 727-745, December.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ecinnt:v:26:y:2017:i:1-2:p:150-167. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/GEIN20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.