Department of Economics
The University of Calgary
2500 University Drive N. W.
Calgary AB T2N 1N4
Institutional Affiliation: University of Calgary
Information about this author at RePEc
NBER Working Papers and Publications
|May 2010||Market Structure and Innovation: A Dynamic Analysis of the Global Automobile Industry|
with Johannes Van Biesebroeck: w15959
We study the relationship between market structure and innovation in the global automobile industry from 1982 to 2004 using the dynamic industry framework of Ericson and Pakes (1995). Firms optimally choose a continuous level of innovation in a strategic and forward-looking manner, while anticipating the possibility of future mergers. We show that our estimated model predicts the data well and that changes in the modeling assumptions have a predictable effect on the key dynamic parameter -- the cost of innovation. In terms of the relationship between market structure and innovation, we find that: (1) At the firm level, there is a weakly positive relationship between a firm's price-cost margin and its innovation intensity; (2) There is no relationship between competition and innovation at t...
Published: Aamir Rafique Hashmi & Johannes Van Biesebroeck, 2016. "The Relationship between Market Structure and Innovation in Industry Equilibrium: A Case Study of the Global Automobile Industry," The Review of Economics and Statistics, MIT Press, vol. 98(1), pages 192-208, March. citation courtesy of