Patents, R&D, and Market Structure in the U.S. Food Processing Industry

Abstract

This study investigates the effects of market structure and research and development (R&D) on the innovation activities of firms. Fixed and random effects count data models are estimated with firm-level data for the U.S. food processing industry. Results show a positive association between patents and R&D, and patents and market structure, suggesting that firms which exhibit noncompetitive behavior are likely to develop new products and processes. Significant intra-industry spillovers of knowledge are identified using industry R&D. for this industry, deadweight losses from imperfect competition may be offset by greater product variety and quality of food products for consumers.

Keywords

• food processing firms
• innovative activity
• market share
• r&d
• spillovers