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Market Competition, Technology Gap and Innovation
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TitleMarket Competition, Technology Gap and Innovation  
AuthorYi Jingtao and Meng Shuang  
OrganizationRenmin University of China; 
Key WordsInnovation; Competition; Technology gap; Manufacturing sector. 
AbstractThis paper investigates the relationship between product market competition, technology gap and innovation. Based on the duopoly model, we established the inverted-U relationship between market competition and innovation. We parameterized the theoretical relationship and built the empirical model on the determinants of innovation. Using the panel data in the manufacturing sector in 2008-2011, we applied Poisson regression and Generalized Least Squares estimation to perform the empirical analyses. The results show that there is an inverted-U relationship between market competition and innovation, and we find that the average technological distance between leaders and followers increases with competition, and in more neck-and-neck industries, the peak of inverted-U is higher and occurs at a higher level of competition. This research confirms the prediction of competition and innovation theory with empirical results and has implications for the Chinese government on competition and innovation policies.  
Serial NumberWP982 
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