Skip to Main content Skip to Navigation
Journal articles

The Causal Effects of Competition on Innovation: Experimental Evidence

Abstract : We design two laboratory experiments to analyze the causal effects of competition on step-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by the ex post rents for firms that operate at the same technological level, that is, for neck-and-neck firms. First, we find that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased competition decreases R&D investments by firms that are lagging behind, in particular if the time horizon is short. Third, we find that increased competition affects industry composition by reducing the fraction of sectors where firms are neck-and-neck. All these results are consistent with the predictions of step-by-step innovation models.
Document type :
Journal articles
Complete list of metadata

https://halshs.archives-ouvertes.fr/halshs-01883563
Contributor : Caroline Bauer Connect in order to contact the contributor
Submitted on : Friday, September 28, 2018 - 12:19:26 PM
Last modification on : Friday, April 29, 2022 - 10:13:21 AM

Links full text

Identifiers

Citation

Philippe Aghion, Stefan Bechtold, Lea Cassar, Holger Herz. The Causal Effects of Competition on Innovation: Experimental Evidence. Journal of Law, Economics, and Organization, Oxford University Press (OUP), 2018, 34 (2), ⟨10.1093/jleo/ewy004⟩. ⟨halshs-01883563⟩

Share

Metrics

Record views

196