| Abstract: |
This PhD thesis deals with competition and innovation as drivers of
productivity. According to literature, competition and innovation seem to be
indivisibly connected to each other. Competition stimulates innovation by
firms, and firms that innovate try to beat their competitors otherwise they
will be swallowed by them. Competition as well as innovation are main drivers
of productivity growth, but according to recent insights a trade-off may exist
between these drivers. In fact, the relationship could look like an inverted U
suggesting that competition is not always positively correlated with
innovation. If competition is too intense, it has a negative effect on
innovation (and productivity). This thesis has two main goals. First, it sheds
more light on how to measure competition on product markets. In that respect,
it elaborates on a new competition measure, the profit elasticity (PE).
Chapter 2 extensively discusses this indicator and explicitly focus on what is
meant by ‘competition’. Chapter 3 provides a guide for researchers how to
measure PE in practice. The second goal of this thesis is to analyze the
relationship between competition, innovation and productivity. As empirical
evidence for this relationship is hardly available for the Netherlands,
chapter 4 fills this gap by using Dutch (aggregate) firm level data. Chapter 5
examines the link between competition and product innovation at the firm
level. It particularly analyzes the effect of product differentiation related
to making products less close substitutes, and hence making markets less
competitive. |