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Discussion Paper Details

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Title: Price Competition, Innovation and Profitability: Theory and UK Evidence

Author(s): George Symeonidis

Publication Date: May 2001

Keyword(s): Cartels, Innovation, Manufacturing, Market Structure, Price Competition, Profitability and UK

Programme Area(s): Industrial Organization

Abstract: This Paper examines the effect of price competition on innovation, market structure and profitability in R&D-intensive industries. The theoretical predictions are tested using UK data on the evolution of competition, concentration, innovation counts and profitability over 1952-77. The econometric results suggest that the introduction of restrictive practices legislation in the UK had no significant effect on the number of innovations commercialized in previously cartelized R&D-intensive manufacturing industries, while it caused a significant rise in concentration in these industries. In the short run profitability decreased, but in the long run it was restored through the rise in concentration.

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Bibliographic Reference

Symeonidis, G. 2001. 'Price Competition, Innovation and Profitability: Theory and UK Evidence'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=2816