Product market competition and the value of innovation: Evidence from US patent data

Hyun Joong Im; Young Joon Park; Janghoon Shon

doi:10.1016/j.econlet.2015.10.017

Product market competition and the value of innovation: Evidence from US patent data

Hyun Joong Im, Young Joon Park, Janghoon Shon

School of Business Administration

Research output: Contribution to journal › Article › peer-review

24 Scopus citations

Abstract

This study investigates the relationship between product market competition and the market value of innovation using firm-level patent data of US firms over the period 1977-2005. We find that there is an inverted U-shaped relationship between competition and the value of innovation. Furthermore, we show that there is an ". asymmetric" causal effect of intensifying product market competition on the market value of innovation, using a quasi-natural experiment based on tariff-cut events for US manufacturing firms between 1977 and 2006: a firm's incentive to innovate tends to get stronger in response to a tariff cut when product market competition is very mild, while it tends to get weaker when very severe.

Original language	English
Pages (from-to)	78-82
Number of pages	5
Journal	Economics Letters
Volume	137
DOIs	https://doi.org/10.1016/j.econlet.2015.10.017
State	Published - 1 Dec 2015

Keywords

Innovation
Product market competition
Tariff cuts
Value of innovation

Access to Document

10.1016/j.econlet.2015.10.017

Cite this

@article{7dd4512e838e4a0185228fe0c479bca6,

title = "Product market competition and the value of innovation: Evidence from US patent data",

abstract = "This study investigates the relationship between product market competition and the market value of innovation using firm-level patent data of US firms over the period 1977-2005. We find that there is an inverted U-shaped relationship between competition and the value of innovation. Furthermore, we show that there is an {"}. asymmetric{"} causal effect of intensifying product market competition on the market value of innovation, using a quasi-natural experiment based on tariff-cut events for US manufacturing firms between 1977 and 2006: a firm's incentive to innovate tends to get stronger in response to a tariff cut when product market competition is very mild, while it tends to get weaker when very severe.",

keywords = "Innovation, Product market competition, Tariff cuts, Value of innovation",

author = "Im, {Hyun Joong} and Park, {Young Joon} and Janghoon Shon",

note = "Publisher Copyright: {\textcopyright} 2015 Elsevier B.V.",

year = "2015",

month = dec,

day = "1",

doi = "10.1016/j.econlet.2015.10.017",

language = "English",

volume = "137",

pages = "78--82",

journal = "Economics Letters",

issn = "0165-1765",

publisher = "Elsevier B.V.",

}

TY - JOUR

T1 - Product market competition and the value of innovation

T2 - Evidence from US patent data

AU - Im, Hyun Joong

AU - Park, Young Joon

AU - Shon, Janghoon

PY - 2015/12/1

Y1 - 2015/12/1

N2 - This study investigates the relationship between product market competition and the market value of innovation using firm-level patent data of US firms over the period 1977-2005. We find that there is an inverted U-shaped relationship between competition and the value of innovation. Furthermore, we show that there is an ". asymmetric" causal effect of intensifying product market competition on the market value of innovation, using a quasi-natural experiment based on tariff-cut events for US manufacturing firms between 1977 and 2006: a firm's incentive to innovate tends to get stronger in response to a tariff cut when product market competition is very mild, while it tends to get weaker when very severe.

AB - This study investigates the relationship between product market competition and the market value of innovation using firm-level patent data of US firms over the period 1977-2005. We find that there is an inverted U-shaped relationship between competition and the value of innovation. Furthermore, we show that there is an ". asymmetric" causal effect of intensifying product market competition on the market value of innovation, using a quasi-natural experiment based on tariff-cut events for US manufacturing firms between 1977 and 2006: a firm's incentive to innovate tends to get stronger in response to a tariff cut when product market competition is very mild, while it tends to get weaker when very severe.

KW - Innovation

KW - Product market competition

KW - Tariff cuts

KW - Value of innovation

UR - http://www.scopus.com/inward/record.url?scp=84946426508&partnerID=8YFLogxK

U2 - 10.1016/j.econlet.2015.10.017

DO - 10.1016/j.econlet.2015.10.017

M3 - Article

AN - SCOPUS:84946426508

SN - 0165-1765

VL - 137

SP - 78

EP - 82

JO - Economics Letters

JF - Economics Letters

ER -

Product market competition and the value of innovation: Evidence from US patent data

Abstract

Keywords

Access to Document

Other files and links

Fingerprint

Cite this