Competition and Innovation in Markets for Technology

Authors

Jean Etienne de Bettignies, The Stephen J. R. Smith School of Business
Hua Fang Liu, Kean University
David T. Robinson, Fuqua School of Business
Bulat Gainullin

Document Type

Article

Publication Date

8-1-2023

Abstract

We examine the impact of product market competition on innovation in markets for technology. An innovator makes an investment in quality-improving innovation that can be licensed to one (targeted licensing) or all (market-wide licensing) product market competitors. Our model points to a U-shaped relationship between competition in licensee product markets and innovation in the market for technology: at low levels of competition, market-wide licensing is optimal, and competition reduces innovation, whereas at high levels of competition, targeted licensing is optimal and competition increases innovation. Our empirical analysis using a large panel of U.S. data provides clear support for these predictions linking competition, innovation, and licensing.

Publication Title

Management Science

First Page Number

4753

Last Page Number

4773

DOI

10.1287/MNSC.2022.4574

Recommended Citation

de Bettignies, Jean Etienne; Liu, Hua Fang; Robinson, David T.; and Gainullin, Bulat, "Competition and Innovation in Markets for Technology" (2023). Kean Publications. 83.
https://digitalcommons.kean.edu/keanpublications/83