A simultaneous equations study of research and development intensity |
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Institution: | 1. Institute of Psychology, Erasmus University Rotterdam, Rotterdam, The Netherlands;2. Utrecht University, Utrecht, The Netherlands;3. Antes mental health care, Rotterdam, The Netherlands;1. School of Pharmacy, Shenyang Pharmaceutical University, Wenhua Road 103, Shenyang, Liaoning 110016, China;2. Mailman Research Center, McLean Hospital, Harvard Medical School, Boston, MA, United States |
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Abstract: | This paper presents a simultaneous equations model of profitability, concentration, advertising, and research and development outlays. We find that research and development intensity tends to increase in more concentrated industries, although this effect is negated in industries where technological opportunities are excellent. Also, high levels of research and development may reduce concentration while tending to add to industry profitability. These results suggest that the government should not be concerned with the possibility of an adverse impact of market concentration on research and development, although the evidence suggests that certain high technology industries may be at a small risk. |
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