Please wait a minute...

Frontiers of Economics in China

Front. Econ. China    2017, Vol. 12 Issue (3) : 450-464     DOI: 10.3868/s060-006-017-0019-2
Orginal Article |
Product Market Competition and Innovation: What Can We Learn from Economic Theory?
Zhiqi Chen()
Department of Economics, Carleton University, Ottawa, K1S 5B6, Canada
Download: PDF(231 KB)  
Export: BibTeX | EndNote | Reference Manager | ProCite | RefWorks

By means of a literature review, this paper strives to provide some clarity on the much-debated relationship between product market competition and firms’ incentives to innovate. It shows that in the literature there does not exist a robust relationship between competition and incentives to innovate. Therefore, it would be futile to continue the debate over whether competition stimulates or hinders innovation. A more useful approach is to make a distinction between pre-innovation competition and post-innovation competition, as it provides a way for reconciling many of the seemingly contradictory findings from the literature. Another important insight from the literature is that the relationship between competition and innovation depends on the source of increased competition.

Keywords innovation      product market competition      incentive     
Issue Date: 19 September 2017
 Cite this article:   
Zhiqi Chen. Product Market Competition and Innovation: What Can We Learn from Economic Theory?[J]. Front. Econ. China, 2017, 12(3): 450-464.
E-mail this article
E-mail Alert
Articles by authors
Zhiqi Chen
Related articles from Frontiers Journals
[1] Heinz D. Kurz. Technical Progress and the Diffusion of Innovations: Classical and Schumpeterian Perspectives[J]. Front. Econ. China, 2017, 12(3): 418-449.
[2] Yinxing Hong, Yao Lu, Jianghuai Zheng. Industrialized Innovation: The Connection of Science & Technology Innovation with Industrial Innovation[J]. Front. Econ. China, 2017, 12(3): 400-417.
[3] Chorching Goh,Lixin Colin Xu,Wei Li. R&D Returns, Spillovers and Firm Incentives: Evidence from China[J]. Front. Econ. China, 2016, 11(4): 581-607.
[4] Ming-Jen Chang,Ping Wang,Danyang Xie. The Dynamic Process of Economic Takeoff and Industrial Transformation[J]. Front. Econ. China, 2016, 11(1): 60-87.
[5] Xinkui Wang. Shanghai Pilot Free Trade Zone and the National Strategy of Opening-up to Boost Reform[J]. Front. Econ. China, 2015, 10(4): 591-603.
[6] Keun Lee,Shi Li. Possibility of a Middle Income Trap in China: Assessment in Terms of the Literature on Innovation, Big Business and Inequality[J]. Front. Econ. China, 2014, 9(3): 370-397.
[7] Chih-Chen Liu,Joseph A. Herriges,C. L. Kling,Silvia Secchi,Joan I. Nassauer,Daniel J. Phaneuf. A Comparison of Value Elicitation Question Formats in Multiple-Good Contingent Valuation[J]. Front. Econ. China, 2014, 9(1): 85-108.
[8] Xudong Chen,Guoqiang Tian,Jijun Xia. On the Fundamentals of a Successful Reform for National Prosperity—An Economic Analysis Based on the Practice of China’s Reform[J]. Front. Econ. China, 2013, 8(4): 490-515.
[9] Dahai Fu, Yanrui Wu, Yihong Tang. Does Innovation Matter for Chinese High-Tech Exports? A Firm-Level Analysis[J]. Front Econ Chin, 2012, 7(2): 218-245.
[10] Haiwen Zhou. Confucianism and the Legalism: A Model of the National Strategy of Governance in Ancient China[J]. Front Econ Chin, 2011, 6(4): 616-637.
[11] . Influence of export on innovation activities of domestic enterprises —Intra-industry and inter-industry spillovers[J]. Front. Econ. China, 2009, 4(3): 449-460.
[12] DING Jihong, ZHU Minglai. A theoretical investigation of the reformed public health insurance in urban China[J]. Front Econ Chin, 2009, 4(1): 1-29.
[13] XU Changsheng , WANG Jingjing , WANG Hai. Demand-oriented innovation of firms in China: An empirical study[J]. Front Econ Chin, 2008, 3(4): 548-559.
[14] ZHANG Li. Involution or pursuit of profit? —A reassessment of Chinese sericulture during the 1840s–1940s[J]. Front. Econ. China, 2007, 2(4): 558-593.
[15] KOU Zonglai, ZHANG Jian. Endogenous licensing in cumulative innovation[J]. Front. Econ. China, 2007, 2(3): 424-457.
Full text