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Incentives to Innovate: A Structural Model of Oligopoly (available only in German!)

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  • Dietmar Harhoff

Abstract

The paper develops an oligopoly model of innovation and applies it to data from the Mannheim Innovation Panel. The model circumvents the need for market share and price elasticity data which typically can only be determined with measurement error and are therefore a major source of misspecification. The regression results suggest that access to sources of information is an important determinant for the firm's R&D activity. Endogenous protection mechanisms such as lead time, design complexity, etc. are important determinants of overall innovation expenditures, but not for R&D specifically. If legal protection mechanisms (such as patents) are effective, they exert a positive effect on R&D spending. Firm-specific financing conditions also affect the innovation activity of the firm. Specification tests derived from the theoretical model do not lead to a rejection of the validity of the empirical model. ZUSAMMENFASSUNG - (Innovationsanreize in einem strukturellen Oligopolmodell) In diesem Beitrag wird ein Oligopolmodell der Innovationsaktivität entwickelt und mit Daten aus dem Mannheimer Innovationspanel geschätzt. Das Modell erlaubt es, bei der empirischen Umsetzung auf die Verwendung von Marktanteilsdaten und Nachfrageelastizitäten zu verzichten, die typischerweise nur annähernd ermittelt werden können und eine wichtige Quelle von Fehlspezifikationen darstellen. Die Regressionsergebnisse zeigen auf, daß der Zugang zu Informationsquellen eine wichtige Determinante der FuEAktivitäten darstellt. Endogene Schutzmechanismen wie Zeitvorsprünge, Komplexität des Produktdesigns, etc. bestimmen insbesondere den Umfang der gesamten Innovationsaufwendungen, aber weniger den der FuE-Aufwendungen. Sofern rechtliche Schutzmechanismen (z.B. Patente) effektiv eingesetzt werden können, wirken sie sich positiv auf die FuE-Tätigkeit aus. Firmenspezifische Finanzierungsbedingungen beeinflussen ebenfalls die Innovationsaktivität des Unternehmens. Spezifikationstests, die sich aus dem theoretischen Modell ableiten lassen, führen nicht zu einer Zurückweisung der Validität des Modells.

Suggested Citation

  • Dietmar Harhoff, 1997. "Incentives to Innovate: A Structural Model of Oligopoly (available only in German!)," CIG Working Papers FS IV 97-09, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
    • Handle: RePEc:wzb:wzebiv:fsiv97-9
    Note: This paper is only available in the German language.
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    References listed on IDEAS

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    Keywords

    Oligopoly and other imperfect markets; innovation and invention; processes and incentives; intellectual property rights; national and international issues; Europe;
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