Market Structure and Research Intensity in High-Technological-Opportunity Industries

A re-examination of the relationship between industry structure and economic performance

“…more profitable (there is no evidence to suggest otherwise), then generalizing the effect from the firm level to the industry level allows for a conclusion that profitability will have a positive effect on research and development efforts. Scherer (1983) reports a positive concentration effect on research and development after controlling for technical opportunity while Angelmar (1985) finds a weak negative concentration effect for a sample of high-tech firms. This tends to confirm the theory discussed above, and leads to the expectation of a positive sign for the concentration variable and negative signs for the government research share-concentration variable and the growth interaction term.…”

Is there really an inverted U-shaped relation between competition and R&D?

“…The uncertainty in R&D, firm survival and the degree of price volatility are closely related to the incentive to perform R&D. Anglemar (1985) finds that the impact of market competition on R&D crucially depends on the level of uncertainty in R&D and how difficult it is to imitate a new technology. To be precise, Anglemar finds that if the uncertainty in R&D is low and imitation is difficult, increased market concentration leads to less R&D (and vice versa).…”

Business groups: entry barrier–innovation debate revisited

“…Angelmar (1985) further observed that high concentration is harmful for vigorous exploitation of technological opportunities in industries with low cost and uncertainty of R&D, and strong barriers against imitation. On the other hand, concentration seems to increases R&D investments in industries with high cost and uncertainty of R&D, and no barriers against imitation.…”