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Innovation and competition: evidence from Uruguayan firms

Author

Listed:
  • Ramiro de Elejalde

    (Universidad Alberto Hurtado)

  • Carlos Ponce

    (Universidad Alberto Hurtado)

  • Flavia Roldán

    (Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales. Departamento de Economía)

Abstract

This article investigates the relationship between product market competition and innovation. We find a negative and significant impact of competition on resources devoted to innovation activities, but a strong evidence of a positive and significant effect of competition on the efficiency of innovation expenditures using micro-level data from Uruguay. Moreover, we find that this effect is not negligible. An increase in one standard deviation (sd) in competition increases the efficiency in innovation expenditures between 1.0 sd and 2.5 sd depending on the measure of efficiency. Our finding has important implications for antitrust policy: as competition increases, resources devoted to innovation activities become more efficient.

Suggested Citation

  • Ramiro de Elejalde & Carlos Ponce & Flavia Roldán, 2018. "Innovation and competition: evidence from Uruguayan firms," Documentos de Investigación 116, Universidad ORT Uruguay. Facultad de Administración y Ciencias Sociales.
    • Handle: RePEc:avs:wpaper:116
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    References listed on IDEAS

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    More about this item

    Keywords

    innovation; competition; Uruguay;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies

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