study the equilibrium relationship between market structure and innovation. The key state variable in the model is the …. Efficiency is estimated to be stochastically increasing in the dynamic control--innovation--which is proxied by patenting … behavior. Equilibrium innovation is a function of all state variables in the industry and the cost of R&D which includes a …

normative analysis, i.e. we evaluate alternative competition and innovation policies from a welfare perspective. Third, we … approach in several ways. We reproduce the empirical finding that innovation levels are higher in markets with lower price … dynamic markets characterized by higher levels of innovation should be less competitive. Furthermore, we demonstrate how our …