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Discussion Paper Details

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Title: Innovation and Market Structure: An Empirical Evaluation of the 'Bounds Approach' in the Chemical Industry

Author(s): Pedro Luis Marín Uribe and Georges Siotis

Publication Date: January 2002

Keyword(s): bounds approach, chemical industry, innovation and market structure

Programme Area(s): Industrial Organization

Abstract: This Paper empirically tests the ?bounds approach? to industry structure proposed by Sutton ((1991), (1998)). To carry out this task, we focus on the chemical industry. Part of the novelty in this exercise is that we work on the finest possible level of disaggregation. Also, we identify demand substitutability from direct industry sources. This allows us to carefully define markets, and identify R&D intensity for each of them. Our empirical specification allows us to simultaneously test the predictions of Sutton (1991) and Sutton (1998). Our results provide strong support to Sutton?s theoretical framework.

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Bibliographic Reference

Marín Uribe, P and Siotis, G. 2002. 'Innovation and Market Structure: An Empirical Evaluation of the 'Bounds Approach' in the Chemical Industry'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=3162