INNOVATION, MARKET POWER AND PRODUCTIVITY IN THE BRAZILIAN CHEMICAL INDUSTRY

Gilson G. Silva, Jr., Federal University of Santa Catarina, Brazil
José Maria Silveira, State University of Campinas, Brazil
Júlia Paranhos, Federal University of Rio de Janeiro, Brazil
Lia Hasenclever, Federal University of Rio de Janeiro, Brazil
Rogério Boueri, Institute of Applied Economic Research – IPEA, Brazil

Published in

JOURNAL OF ACADEMY OF BUSINESS AND ECONOMICS
Volume 18, Issue 1, p45-50, March 2018

ABSTRACT

This paper objective is to analyze ex-ante (market share) and ex-post (appropriability) market power impact on Brazilian Chemical manufacturing firms' innovation and R&D decisions, conditional to productivity estimated under constant and variable returns to scale, using microdata from Brazilian surveys. This kind of research is particularly important given that innovation and productivity are key variables in any modern economy. According to many theoretical and empirical studies for developed economies both market power and productivity have impact on innovation. But there is no evidence for developing economies, Brazilian particularly. Our regression analysis results suggest that ex-ante and ex-post market power have a positive impact on decisions made by Chemical industry firms in terms of both R&D and innovation. Productivity estimated with variable returns to scale suggests that low productivity firms has a compensation inefficiency mechanism: find out new products and continuous R&D efforts.

Keywords

innovation, productivity, market structure, chemical industry.


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