FIG

• Ref.: PID2021-123869NB-I00
• Principal Investigator: Carolina Villegas
• Research group: GREF
• Funding body: Generación de Conocimiento 2021 Ministerio Ciencia e Innovación
• Funding: 17.460,30 €
• Duration: 36 months

Summary: 

The increase in company markups is broad-based across countries and sectors but the rise has been particularly sharp in the technology and pharmaceutical industries. In recent decades, the weight of the economy has shifted towards high tech, innovative sectors. Hence, understanding the dynamics of these sectors has become ever more important, and we need more evidence on the link between high-markup firms and observed changes in real economic outcomes, including innovation, to fully gauge the importance of this phenomenon for the overall economy, and the potential long-term effects.

This research proposal aims to document the interaction between product market competition and innovation. The first part of the project will explore the characteristics of innovative firms, identified as those firms that patent standard and/or breakthrough innovations, and the second part of the project will delve into the relationship between competition and innovation. To answer key long-standing questions on firm dynamics and aggregate growth, the project will use a new firm-level dataset from 12 advanced and emerging countries having information on over 138 million patents linked to information on about 2.4 million companies. The dataset includes both large and small firms (and importantly, both listed and private firms) that will allow the research team to identify breakthrough innovations, productivity frontier and laggard firms, as well as product market leaders.