COMPETITION AND INNOVATION: THE INVERTED-U RELATIONSHIP REVISITED

• 成果类型: Article
• 署名作者: Hashmi, Aamir Rafique
• 署名单位: National University of Singapore
• 刊物名称: REVIEW OF ECONOMICS AND STATISTICS
• ISSN/ISSBN: 0034-6535
• DOI: 10.1162/REST_a_00364
• 发表日期: 2013-12
• 页码: 1653-1668
• 关键词: growth

摘要

I reexamine the inverted-U relationship between competition and innovation (modeled and tested by Aghion et al. (2005)) by using data from publicly traded manufacturing firms in the United States. I control for the possible endogeneity of competition by using a trade-weighted average of industry exchange rates as an instrument. I find a mildly negative relationship between competition (as measured by the inverse of markups) and innovation (as measured by citation-weighted patents). The negative relationship is robust to many alternative assumptions and specifications. To reconcile the mildly negative relationship in the U.S. data with the inverted-U relationship that Aghion et al. (2005) find in the U.K. data, I modify their theoretical model and show that the modified model can explain both negative and inverted-U relationships. The key theoretical assumption is that the U.K. manufacturing industries are technologically more neck-and-neck than their counterparts in the United States. I find support for this assumption in the data. The different empirical results between the two countries may also arise because of differences in data and samples.