Innovative Efforts, Technological Opportunity And Changes In Market Structure In Italian Manufacturing

Numerous attempts have been made to account for cross-industries differences in technological efforts; most of them have been accomplished along the lines of the structure-conduct-performance hypothesis. It is our purpose to reverse such an approach in the light of the latest theoretical and empirical contributions. We study the effects on the market structure of differences in firms' innovative effort within different technological environments, defined in terms both of the technological opportunity and of the appropriability of the innovations' returns. Results from a panel of Italian industrial sectors for the period 1978-1993 confirm previous evidence from other countries: technological efforts prove to have a negative impact on the level of concentration. Moreover, such a relationship may be modified depending on the technological conditions prevailing in each industry. The higher the potential knowledge available (better opportunity conditions), the lower the entry barriers and the more decentralising is the effect of technological activity. At the same time, the better the appropriability conditions, the more successfully innovative behaviour conveys greater quotas of the market, increasing its concentration.