Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/27556
Authors: 
Czarnitzki, Dirk
Etro, Federico Gabriele
Kraft, Kornelius
Year of Publication: 
2008
Series/Report no.: 
ZEW Discussion Papers 08-078
Abstract: 
We develop a simple model of competition for the market that shows that, contrary to the Arrow view, endogenous entry threat in a market induces the average firm to invest less in R&D and the incumbent leader to invest more. We test these predictions with a Tobit model based on a unique dataset and survey for the German manufacturing sector (the Mannheim Innovation Panel). We confirm the empirical validity of our predictions and perform a number of robustness test with instrumental variables.
Subjects: 
R&D
Entry
Endogenous market structures
Leadership
JEL: 
O32
O31
Document Type: 
Working Paper

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