A selection model of r&d intensity and market structure in spanish firms
ISSN: 1578-0252
Año de publicación: 2008
Número: 9
Páginas: 3-37
Tipo: Artículo
Otras publicaciones en: Papeles de trabajo del Instituto de Estudios Fiscales. Serie economía
Resumen
I present new econometric evidence on the relation between market structure and R&D using data of Spanish firms. I adopt a different approach from previous studies by distinguishing between long-run and short-run decisions of firms regarding R&D. I assume that the long-run or strategic decision is whether to conduct R&D or not and the short-run choice is how much to invest once the firm decides to be innovative. I argue that market structure affects long-run R&D decisions but does not affect short-run ones. A Heckman-type selection model is used to test such a relation. The results are robust to several specifications and measures of monopoly power.