Econometric Tests of the Market Structural Determinants of R&D Investment: Consistency of Absolute and Relative Firm Size Models

Warning: is_dir(): open_basedir restriction in effect. File(/libraries) is not within the allowed path(s): (/home/web1050:/usr/share/php) in libraries_get_libraries() (line 176 of /home/web1050/public_html/sites/all/modules/contrib/libraries/libraries.module).

This paper examines how the estimated coefficients in firm-level tests of the market structure--R & D hypothesis can be used to determine the effect of market restructuring on expected industry R & D. A theoretical taxonomy is illustrated with a simple single equation econometric model, and this example illustrates that even if the coefficients on the market power variables are significantly positive, market restructuring to reduce market concentration may increase expected industry R & D.