TILEC Seminar: Georgios Petropoulos

Abstract

This paper studies the relationship between product market competition and innovation under the presence of financial constraints. We develop a step-by-step model to show that while the direct effect of financial constraints on innovation is negative, they could incorporate an indirect positive effect conditional on market competition. As competition increases, firms have greater incentives to innovate and improve their market position with the increasing catching-up cost (by their competitors) due to financial constraints. In other words, financial constraints increase the first-mover innovator’s advantage, which is strictly increasing in the level of market competition. We confirm the main predictions of our model using data from US public firms and patent data from the USPTO. We also discuss the important policy implications of our findings for competition policy at times of financial distress.

Presented by : Georgios Petropoulos

Georgios Petropoulos is a researcher at the Massachusetts Institute of Technology, Sloan School of Management. As the same time, he is also a Digital Fellow at the Digital Economy Lab of Stanford University and a Non-resident fellow at Bruegel, the economics think tank based in Brussels. His research focuses on the implications of digital technologies on innovation, competition policy, and labor markets. He holds a Bachelor’s degree in Physics and a PhD degree in Economics. 

Time: 10:45-11:45 hrs

Host: Florian Schütt  
Moderator:  Konrad Borowicz