Downstream Competition and Upstream Innovation:Theory and Evidence from China

作     者：Jing Dai Guanchun Liu Ziqi Ye Haiou Mao Yongwei Ye 

作者机构：School of FinanceHubei University of Economics Lingnan CollegeSun Yatsen University School of Business AdministrationZhongnan University of Economics and Law College of Economics and ManagementHuazhong Agricultural University School of Public Economics and ManagementShanghai University of Finance and Economics 

出 版 物：《China Finance and Economic Review》 (中国财政与经济研究（英文）)

年 卷 期：2024年第13卷第1期

页      面：67-87页

学科分类：0202[经济学-应用经济学] 02[经济学] 020205[经济学-产业经济学] 

主　　题：downstream competition upstream firms'innovation vertical industrial chain market size effect 

摘      要：Competition is the catalyst of corporate innovation,which is the foundation of a country s core *** the view of vertical industrial chain,this paper examines how downstream competition affects upstream firms innovation *** innovation helps reduce the production cost of each product,increasing demand of intermediate products caused by downstream competition enhances the marginal revenue of upstream firms innovation,thus leading to an innovation incentive *** identify causality,we utilize China s WTO accession,a quasinatural experiment,to calculate downstream competition combined with import tariff reduction and input-output table,and then run a difference-in-difference *** the data of Annual Survey of Industrial Firms and State Intellectual Property Office,our results find that downstream competition has a significantly positive impact on upstream firms innovation,and this effect is more pronounced in firms with less industry competition,greater initial innovation capacity and weaker financial ***,the number of firms,the degree of industry competition and the scale of intermediate products in the downstream sector increase,confirming the market size *** sum,our findings document that downstream competition can motivate upstream firms to innovate through vertical industrial chain,providing some useful insights for China to build a fair market competition environment and promote innovation-driven growth regime.