The relationship between R&D and competition : reconciling theory and evidence
MetadataShow full item record
The hypothesis of a hump-shaped relationship between innovation and competition due to Aghion, Bloom, Blundell, Griffith, and Howitt (2005), has been tested for different data sets without garnering conclusive support. In this paper we argue that this lack of agreement is because of a difference in approaches to measuring innovation (either in terms of R&D outcomes or by R&D effort). We develop a unified tractable general-equilibrium framework, in which, while R&D outcomes are a hump-shaped function of competition, R&D effort can be observed to be either increasing, decreasing, or hump-shaped. This enables our paper, first, to reconcile the conclusions by Aghion et al. (2005) with more recent results and, second, to inform further attempts to identify the hump-shaped relationship in data.
Chernyshev , N 2017 ' The relationship between R &D and competition : reconciling theory and evidence ' CDMA Working Paper , no. 1704 .
Working or discussion paper
Copyright (c)2017 the author
DescriptionGenerous financial support of the Royal Economic Society is gratefully recognised.
Items in the St Andrews Research Repository are protected by copyright, with all rights reserved, unless otherwise indicated.