Chapter 1: Governance, regulation and innovation: new perspectives and evidence
Restricted access

For a long time, determinants of innovation were studied with an exclusive focus on market structure, industry characteristics, technology choice, and appropriability of innovation profits. This institution-free approach can be traced back to Schumpeter’s (1934, 1942) seminal work, which argued that large firms and concentrated market structures promote innovation. Arrow (1962) takes issue with the Schumpeterian hypothesis and demonstrates that a monopoly shielded against competition has less incentive to innovate compared to firms within a perfectly competitive market. According to Gilbert (2006), we are still far from a general theory of the relationship between innovation and market structure as industry characteristics, the nature of technological competition and the distinction between product and process innovation emerge as confounding factors. Yet, recent empirical work informed by Aghion et al. (2002a, 2005) demonstrate that the relationship between market structure and innovation is likely to be non-linear, with competition fostering innovation at low levels of competition but reducing innovation when the initial level of competition is already high (Peneder, 2012).

You are not authenticated to view the full text of this chapter or article.

Access options

Get access to the full article by using one of the access options below.

Other access options

Redeem Token

Institutional Login

Log in with Open Athens, Shibboleth, or your institutional credentials

Login via Institutional Access

Personal login

Log in with your Elgar Online account

Login with you Elgar account
Edited by Mehmet Ugur
Monograph Book