Policy makers in Europe have been concerned that lack of product market competition have led productivity to lag behind … the US. Theoretical models are ambiguous about the direction of the effect that product market competition should have on … productivity. On the one hand increasing competition lowers firm's profits and thus reduces incentives to exert effort (the …

This paper investigates the relationship between product market competition (PMC) and innovation. A Schumpeterian … engage in R&D activities. In this model, competition may increase the incremental profit from innovating; on the other hand …, competition may also reduce innovation incentives for laggards. This model generates four main predictions which we test …

competition among insurers, we generate predictions about the correlation between risk and the probability of taking private …