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- Title
Role of market structure in firm-level innovation: an extended CDM model for a developing economy.
- Authors
Younas, Muhammad Zeeshan; ul Husnain, Muhammad Iftikhar
- Abstract
Despite the substantial number of empirical and theoretical studies, the relationship between competition and innovation remains unclear. This paper shed lights on this multifaceted relationship from a new angle based on a detailed firm-level dataset of private manufacturing Pakistani firms, a survey first time conducted by the World Bank for the Pakistan economy. We used a refined version of the CDM model to examine the impacts of industry-level competition on firm-level innovation and productivity relationship. Our econometric estimates show that a firm belonging to the oligopolistic industry is more likely to take the decision of engaging in innovational activities, however, allocates fewer funds to R&D as compared to a competitive firm. The elasticity of product and process innovation output in terms of R&D intensity is higher in the oligopolistic industry. Correspondingly, product innovation outcome has a stronger influence on firm productivity in the case of a competitive sector. The findings have practical implications for policymakers in the area of market structure and firm-level innovation.
- Subjects
PAKISTAN; MARKET design &; structure (Economics); WORLD Bank; ENERGY intensity (Economics)
- Publication
Decision (0304-0941), 2022, Vol 49, Issue 1, p91
- ISSN
0304-0941
- Publication type
Article
- DOI
10.1007/s40622-022-00303-2