How does firm entry affect innovation incentives and productivity growth in incumbent firms? Micro-data suggests that … sectors which differ by their distance to the technological frontier. We show that entry threat spurs innovation incentives in … technologically advanced sectors - successful innovation allows incumbents to prevent entry. In laggard sectors it discourages …

This paper analyzes the relationship between the entry of new firms and the innovation and productivity growth within … existing firms. In particular, we argue that liberalizing entry has a boosting effect on innovation and growth in those …