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Article dans une revue Journal of Law, Economics, and Organization Année : 2018

The Causal Effects of Competition on Innovation: Experimental Evidence

Résumé

We design two laboratory experiments to analyze the causal effects of competition on step-by-step innovation. Innovations result from costly R&D investments and move technology up one step. Competition is inversely measured by the ex post rents for firms that operate at the same technological level, that is, for neck-and-neck firms. First, we find that increased competition leads to a significant increase in R&D investments by neck-and-neck firms. Second, increased competition decreases R&D investments by firms that are lagging behind, in particular if the time horizon is short. Third, we find that increased competition affects industry composition by reducing the fraction of sectors where firms are neck-and-neck. All these results are consistent with the predictions of step-by-step innovation models.
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Dates et versions

halshs-01883563, version 1 (28-09-2018)

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Philippe Aghion, Stefan Bechtold, Lea Cassar, Holger Herz. The Causal Effects of Competition on Innovation: Experimental Evidence. Journal of Law, Economics, and Organization, 2018, 34 (2), ⟨10.1093/jleo/ewy004⟩. ⟨halshs-01883563⟩
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