The appealing idea that market structure influences the incentive to innovate is of long standing. But as Acs and Audretsch (1988) note, the insight stemming from empirical research primarily relies on large-firm data. Also most studies rely on data from large economies. Therefore, less is known on how market structure relate to innovative activity in small open economies. The paper explores the relation between patenting activity and market structure in the Danish manufacturing industries using data from a recently developed database containing accounting information on a sample of patenting firms in Denmark. Market structure by concentration and firm size in manufacturing industries was found to be of opposite effects on firms patent activity. Studies on the relation between industrial innovation and market structure in the Danish manufacturing industries are few. Also, since the majority of firms in Denmark are comparatively small and innovative activity is a rare event with distinct stochastic properties, it is argued that a statistical framework based on the properties of the probit distribution is an improvement compared to the standard LS-approach. A two-stage self-selection correction procedure suggested by Heckman (1976, 1979) is applied and the resulting estimates are compared with the ordinary estimates without correction for self-selection.
Appropriability and Patent Value: Econometrical Aspects, 1999
Patenting; Danish Firms; Self-Selection; Measures of Innovation; HHÅ forskning