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Seoul Journal of Economics - Vol. 32 , No. 4
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Seoul Journal of Economics - Vol. 32, No. 4, pp. 467-491
Abbreviation: SJE
ISSN: 1225-0279 (Print)
Print publication date 30 Nov 2019
Received 29 May 2019 Revised 25 Sep 2019 Accepted 14 Oct 2019

Competition and Innovation Spillover
Jong Hwa Lee ; Jungwook Kim
Jong Hwa Lee, School of Economics, Yonsei University, 50, Yonsei-ro, Seodaemun-gu, Seoul, 03722, Republic of Korea, Tel: +82-10-9989-6329 (jhl058@yonsei.ac.kr)
Jungwook Kim, Center of Regulatory Studies, Korea Development Institute, 263, Namsejong-ro, Sejong-si, 30126, Republic of Korea, Tel: +82-44-550-4748 (awaker2@kdi.re.kr)

JEL Classification: L6, O3, O4

Abstract

This study examines the relationship between the two sides of innovation of research and development (R&D) and competition. By analyzing the Korean firm-level data from 2000 to 2015, we find that competition is an important factor for innovation spillovers. In addition, decreasing competition magnifies the spillover effect. The net effect of the total spillover diminishes sales and productivity as competition decreases. Lack of competition weakens the commonly known relation that R&D exhibits a positive spillover effect on growth.

Keywords: Innovation, Productivity, Spillovers, Competition
Acknowledgments

We would like to thank the anonymous reviewer and editor for constructive comments and suggestions. This paper is developed based on Chapter 3 of Korea’s Road to an Innovation Economy: Enhancing Productivity through Structural Transformation and Institutional Reform, “Market Competition and Spillover Effect,” from KDI Research Monograph (forthcoming).

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