This paper investigates the effect of yardstick competition on firms’ incentives to invest in cost-reducing innovations. We show that an increase in the intensity of yardstick competition, for which we provide a natural measure, increases the incentives to innovate.
Competition and innovation; Yardstick competition; Cost reduction;
- D4: Market Structure and Pricing
- L1: Market Structure, Firm Strategy, and Market Performance
- L5: Regulation and Industrial Policy
Yassine Lefouili, « Does competition spur innovation? The case of yardstick competition », Economics Letters, Elsevier, vol. 137, décembre 2015, p. 135–139.
Economics Letters, Elsevier, vol. 137, décembre 2015, p. 135–139