Long-run versus short-run decisions: R&D and market structure in Spanish firms |
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Authors: | Joaquín Artés |
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Institution: | Department of Economics, University of California, Irvine, 3151 Social Science Plaza, Irvine, CA 92697-5100, United States |
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Abstract: | I present new econometric evidence on the relation between market structure and R&D using data on 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. |
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Keywords: | D4 L1 L6 O3 |
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