Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

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Tuesday, September 3, 2013

Competition and Innovation: An inverted-U relationship using Japanese industry data

Posted by D. Daniel Sokol

YAGI Michiyuki, Tohoku University and MANAGI Shunsuke, RIETI analyze Competition and Innovation: An inverted-U relationship using Japanese industry data.

ABSTRACT: This study replicates a model of Aghion et al. ("Competition and Innovation: An inverted-u relationship," Quarterly Journal of Economics 2005; 120(2):701-728), which suggests that an inverted-U relationship exists between competition and innovation. We apply patent data and a competition measure based on Japanese firm-level and industry-average data from 1964 to 2006. In a constant slope model using a full dataset, we find the same inverted-U relationship as did Aghion-Bloom-Blundell-Griffith-Howitt (ABBGH). In decade and industry fixed-effects slope models, we find the inverted-U relationship to be fragile.

http://lawprofessors.typepad.com/antitrustprof_blog/2013/09/competition-and-innovation-an-inverted-u-relationship-using-japanese-industry-data.html

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