Junior Research Group Competition and Innovation

Focus of the Junior Research Group

Influence of Market Concentration and Competitive Pressure on Productivity and Innovation
Impact of Financial Interconnectedness of Companies on Corporate Strategies
Design of Rules and Processes in Technology Standardisation Procedures
Information Flow Between Companies and Its Effects on Price and Innovation Strategies

The Junior Research Group “Competition and Innovation” addresses questions in competition economics and policy, in particular at the interface to innovation economics. The overarching theme is the analysis and optimal design of competition rules to improve the functioning of both goods and services markets as well as technology markets, and thus improving the well-being of society as a whole. In combination with innovation-friendly policy and the legal protection of intangible assets, optimal competition policy provides incentives for the development of new ideas and technologies without hampering competition by disproportionately restricting access for third parties. To this end, the Junior Research Group studies the incentive effects that law and law enforcement have on the strategic behaviour of companies and use these insights to evaluate competition policy institutions and rules from an innovation economics and innovation policy perspective.

The group uses a broad range of economic tools and applies both theoretical and empirical methods. It provides economic policy advice based on sound scientific evidence and contributes evidence-based and theoretically sound findings to the debate on competition policy. At the same time, their scientific research is driven by questions and problems that have strong practical relevance. In this sense, the Junior Research Group works at the interface between research and policy advice, while being in dialogue with both the scientific community and economic policymakers – a fact that is also reflected in the group’s publication activities. The group’s researchers have published in top-class scientific journals such as the RAND Journal of Economics, the Journal of Industrial Economics, Industrial and Corporate Change, and the Journal of Law and Economics, as well as in practice-oriented journals such as Antitrust Bulletin and Information Economics and Policy.

The Junior Research Group “Competition and Innovation” is the central point of contact for competition issues at ZEW, while also sharing its expertise with other research units in the context of interdisciplinary projects and studies. The Mannheim Centre for Competition and Innovation (MaCCI), jointly run by the University of Mannheim’s School of Law and Economics and ZEW, plays a particularly important role.

This project investigates the effects of financial interdependencies of firms on corporate strategies in the product and technology market. One of the key aims of the project is to analyse how minority holdings affect firms’ price and non-price strategies, and how such ownership structures change market outcomes through their effects on price markups and innovation. In its initial phase in 2019 and 2020, the project was funded by the international research programme “Strengthening Efficiency and Competitiveness in the European Knowledge Economies” (SEEK) at ZEW.

We study the effects of price markups (to proxy firms' competitive pressure, or lack thereof) on innovation, productivity, and consumers. In a 2020 report for the Bertelsmann Stiftung we show that in Germany higher price markups are associated with lower firm-level productivity and innovation. In a 2021 report for the German Federal Ministry for Justice and Consumer Protection [LINK 2], we document that firm-level price markups are higher in industries relevant for consumption expenditures than in average industries.

A recent academic and policy debate over the cause of increased market concentration in many industries has brought merger control into the spotlight: is it too lax? We use European data to compare existing methods of merger evaluation with novel approaches that are less data-demanding to provide competition authorities with an extended and improved toolkit for merger evaluation. One such aspect of merger evaluation is the effect of mergers on innovation. We examine how firms adapt their product-market and innovation strategies after a merger. We are particularly interested in the impact on productivity-enhancing R&D.

The Mannheim Privacy Policy Panel (MaPPP) contains quarterly observations of German firms' privacy policies, spanning 2012 through 2021 (and ongoing). As of January 2022, the panel comprises monthly observations. It covers recent and current legislative and judicial developments in privacy and data regulation, such as the General Data Protection Regulation (GDPR), the Schrems decisions, or the Digital Markets Act (DMA). The MaPPP allows researchers to study the evolution of data privacy policies in Germany over the past decade, using rich firm-level information when merging the data with the Mannheim Enterprise Panel (MUP).