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Content archived on 2024-05-29

Competition and innovation: empirical analysis of market power, schumpeterian competition and innovation

Objective

Recent theoretical work in the field of growth theory has stressed the Schumpeterian nature of the growth process, illustrating the continuous emergence of new ideas and products, and the consecutive decline of old products and ideas, leading to entry and exit of firms.

Empirical research has documented the existence of this process of creative destruction, but has rarely tried to look at the non-idiosyncratic determinants and to assess the consequences of the process. A likely candidate to explain why patterns of creative destruction differ among groups of countries or industries is the extent of product market competition.

This project plans to offer a detailed description of the different effects of competition on firm behaviour through different channels proposed in the literature. First, we will analyze the effect of competition on pricing behaviour of firms. A small literature has analyzed the effect of trade liberalization, competition policy and the implementation of the single market program on the price cost margins using firm level data.

We will offer further evidence from Denmark. Second, we will use the techniques of productivity decomposition in Denmark to assess the effect of entry and exit on industry productivity growth, and the importance of within-establishment and between-establishment components of productivity growth. We will link our results to the extent of competition in the industry and try to find some stylized facts concerning the effect of competition on entry and exit, and job and productivity reallocation.

The most important objective of the research project is to test the link between product market competition and innovation, and the mechanisms through which competition might affect the R and D process, looking more precisely at the effect of competition on the mobility of skilled RandD personnel.

Fields of science (EuroSciVoc)

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Keywords

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Topic(s)

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Call for proposal

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FP6-2002-MOBILITY-5
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Funding Scheme

Funding scheme (or “Type of Action”) inside a programme with common features. It specifies: the scope of what is funded; the reimbursement rate; specific evaluation criteria to qualify for funding; and the use of simplified forms of costs like lump sums.

EIF - Marie Curie actions-Intra-European Fellowships

Coordinator

THE AARHUS SCHOOL OF BUSINESS
EU contribution
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Address
Fuglesangs Alle 4
AARHUS V
Denmark

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Total cost

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