@article{04bd713a3ff54e458d7298668a1f7e80,
title = "Foreign competition and innovation",
abstract = "Empirical studies have found that enhanced foreign competition can encourage or discourage innovation. To address this relationship, I examine a market structure in which a small number of large multi-product oligopolists compete with a large number of small single-product firms in the same industry. The single-product firms are short-lived while the multi-product firms live forever, and the large firms invest in innovation in order to enlarge their product spans. All firms export. I show that an increase in the competitiveness of foreign firms can increase or reduce innovation efforts of a large multi-product firm. Moreover, changes in the incentives to innovate can be different for more-productive and less-productive oligopolists. As a result, aggregate sectoral innovation may rise or decline, depending on the productivity distribution of the oligopolists. I also show that changes in short-term operating profits may not be aligned with changes in the incentives to innovate.",
keywords = "Firm dynamics, Innovation, Product span, Trade",
author = "Elhanan Helpman",
note = "Publisher Copyright: {\textcopyright} 2024 Elsevier B.V.",
year = "2024",
month = nov,
doi = "10.1016/j.jinteco.2024.104007",
language = "אנגלית",
volume = "152",
journal = "Journal of International Economics",
issn = "0022-1996",
publisher = "Elsevier B.V.",
}