The Causal Effects of Competition on Innovation: Experimental Evidence

Aghion, Philippe; Bechtold, Stefan; Cassar, Lea; Herz, Holger

doi:10.1093/jleo/ewy004

Cited by 92 publications

(55 citation statements)

References 41 publications

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“…This design is geared towards examining the relationship between innovation and conduct, as opposed to innovation and (market) structure. For experiments on the latter, see Darai, Sacco, and Schmutzler (2010), Schmutzler (2011), andAghion et al (2018). subjects were randomly assigned into groups of four, and they remained in their group for 25 subsequent periods.…”

Section: A Experimental Designmentioning

confidence: 99%

An Experiment on Innovation and Collusion

Smyth

2019

Economic Inquiry

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This paper examines the relationship between product innovation and the success of price collusion using novel laboratory experiments. Average market prices in low innovation (LO) experiments are significantly higher than those in high innovation, but otherwise identical experiments. This price difference is attributed to LO experimental subjects' greater common market experience. The data illustrate how collusion can be perceived as the “only way to make it” in LO markets where product innovation is not a viable strategy for increasing profits. They suggest that product homogeneity can be a proximate cause, and product innovation an ultimate cause, of collusion. (JEL L41, L10, C92)

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Section: A Experimental Designmentioning

confidence: 99%

An Experiment on Innovation and Collusion

Smyth

2019

Economic Inquiry

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“…An important advance has been the use of randomized experiments to test hypotheses. Aghion, Bechtold, Cassar & Herz (2018) analyzed the intertemporal causal effects of competition on innovation gradually through laboratory experiments. Innovations wer measured in terms of R&D investments.…”

Section: Innovation and Market Competitionmentioning

confidence: 99%

Competition, market concentration and innovation in Ecuador

Peñaloza

Rincón

2019

ecos.econ.

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The objective is to determine how market concentration affects firms' decisions to innovate. With company-level data l from the 2010 Ecuadorian economic census , a probabilistic/linear model was calculated with correction for selection bias. Ecuadorian companies have a limited innovation capability and there is a persistence in market concentration. The estimates confirm the theory of market power in the propensity to innovate for both models. Consequently, increased market share leads to an increase in the likelihood of innovation, thanks to the ability to exploit the gains from these processes. ResumenEl objetivo es determinar cómo la concentración del mercado afecta a la decisión de las empresas de innovar. Con datos a nivel de empresa del censo económico 2010 del Ecuador, se calcula un modelo probabilístico y lineal con corrección del sesgo de selección. Existe una baja capacidad de innovación de las empresas ecuatorianas y una persistencia en la concentración del mercado. Las estimaciones confirman la teoría del poder de mercado en la propensión a innovar para ambos modelos. Por consiguiente, el aumento de la cuota de mercado conduce a un aumento de la probabilidad de innovación, gracias a la capacidad de explotar los beneficios de estos procesos.

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“…These differences partly reflect methodological issues, principally the difficulties in measuring both the dependent variable (innovation) and the independent variable (competition) in contexts where 'all else' is hardly equalnot to mention the endogenous link between competition and innovation, that is, the fact that innovation and competition may depend on each other with no obvious causal direction (Hall and Harhoff 2012). Aghion et al (2014) performed laboratory experiments to observe the effects of competition on innovation. They found, in particular, that an increase in competition markedly increases R&D expenditure from 'neck-and-neck' firms (i.e.…”

Section: Liberalisation and Innovationmentioning

confidence: 99%

Competition and Innovation in Retail Electricity Markets: Evidence from Italy

Stagnaro¹

2017

Economic Affairs

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Italy's 2015 Annual Competition Law, if finally approved, provides for phasing out retail electricity price regulation, as well as the implementation of full retail liberalisation, from 1 July 2018. This is a significant reform, not just because it is consistent with the broader market design for electricity. Indeed, retail liberalisation is a qualifying element of the full integration of the European Union's electricity market. The full opening of retail markets provides a great opportunity for innovation, both on the demand side and on the supply side. This article investigates the theoretical background, and presents some empirical evidence, on the competition-innovation nexus in retail electricity markets.JEL codes: L43, L81, L94, D47.

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The Causal Effects of Competition on Innovation: Experimental Evidence

Cited by 92 publications

References 41 publications

An Experiment on Innovation and Collusion

An Experiment on Innovation and Collusion

Competition, market concentration and innovation in Ecuador

Competition and Innovation in Retail Electricity Markets: Evidence from Italy

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