Antitrust & Competition Policy Blog

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

Tuesday, February 13, 2018

Incumbents' Responses to Innovative Entrants – A Multi-Country Dynamic Analysis

Josefine Diekhof, Centre for European Economic Research (ZEW) and Uwe Cantner, Friedrich Schiller University Jena study Incumbents' Responses to Innovative Entrants – A Multi-Country Dynamic Analysis.

ABSTRACT: The influence of innovative entrants on incumbents is considered important for technological change. We analyze this influence for the global transition towards alternative technology vehicles (ATVs). Our results indicate that entrants’ ATV-related knowledge accumulation stimulates average incumbent’s ATV-related research. Regarding global entrants, incumbents with higher ATV patent stocks increased patenting stronger; supporting previous literature on competitive reactions to entry. Responding to domestic entrants, however, incumbents with low ATV patent stocks increased whereas incumbents with high stocks decreased patenting; suggesting that advanced incumbents outsource research or overtake entrants. Further, certain characteristics and not merely the quantity of entrants drive incumbents’ responses.

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