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Competition, Innovation and Distance to Frontier

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  • Amable, Bruno
  • Demmou, Lila
  • Lezdema, Ivan

Abstract

This paper tests the effect of competition and regulation on innovative activity measured by patenting. It uses a variety of indicators: the relative number of firms in an industry and various indicators of product market regulation. The sample consists of a panel of 15 industries for 17 OECD countries over the period 1979-2003. Results are that the positive effect of competition alledged to be at its maximum when an economy moves closer to the technological frontier is nowhere to be found. Two main configurations emerge. First, regulation has a positive effect whatever the distance to the frontier and the magnitude of its impact is higher the closer the industry is to the frontier. Second, the effect of regulation is negative far from the frontier and becomes positive (or non significant) when the technology gap decreases. These results contradict the belief in the innovation-boosting effect of increased competition such as taken into account in the Lisbon Strategy.

Suggested Citation

  • Amable, Bruno & Demmou, Lila & Lezdema, Ivan, 2007. "Competition, Innovation and Distance to Frontier," CEPREMAP Working Papers (Docweb) 0706, CEPREMAP.
    • Handle: RePEc:cpm:docweb:0706
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    Cited by:

    1. Bruno AMABLE & Yannick LUNG, 2008. "The European Socio-Economic Models of a Knowledge-based society. \r\nMain findings and conclusion \r\n," Cahiers du GREThA (2007-2019) 2008-26, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
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    3. Donatella Gatti, 2009. "Macroeconomic effects of ownership structure in OECD countries ," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 18(5), pages 901-928, October.
    4. Alex Coad, 2008. "Distance to Frontier and Appropriate Business Strategy," LEM Papers Series 2008/13, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
    5. Anton Bondarev, 2016. "Intensity of R&D competition and the generation of innovations in heterogeneous setting," Journal of Evolutionary Economics, Springer, vol. 26(3), pages 621-653, July.
    6. Philippe Aghion & Philippe Askenazy & Renaud Bourlès & Gilbert Cette & Nicolas Dromel, 2008. "Distance à la frontière technologique, rigidités de marché, éducation et croissance," Économie et Statistique, Programme National Persée, vol. 419(1), pages 11-30.
    7. Fontana, Roberto & Vezzulli, Andrea, 2016. "Technological leadership and persistence in product innovation in the Local Area Network industry 1990–1999," Research Policy, Elsevier, vol. 45(8), pages 1604-1619.

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    More about this item

    Keywords

    competition; regulation; innovation; patent;
    All these keywords.

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • O57 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Comparative Studies of Countries

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