An analysis of the effect of product market competition on innovation and productivity in Australia

Supporting research project

Background

Competition is fundamental to establishing and maintaining an environment conducive to innovation and productivity growth. It provides the fundamental incentive for organisations to pursue changes necessary to succeed, through innovation and productivity gains. It also underpins the process of 'creative destruction', where organisations that do not adapt or innovate successfully lose market share to those that do. This study will investigate the relationship between product market competition, innovation and productivity in Australia.

Objectives of the study

The main objective of the study is to investigate the strength and nature of the effect of product market competition on firm and industry level innovation and productivity performance in Australia, providing important qualitative and quantitative input into policy development in general and the National Reform Agenda in particular.

This Staff Working Paper is a companion paper to additional research that was jointly conducted by the Productivity Commission and Australian Bureau of Statistics. The joint research paper, which examines the relationship between competition, innovation and productivity at the firm level using data from the ABS Business Longitudinal Database, is discussed in greater detail at: http://www.pc.gov.au/research/collaboration/business-innovation.

See also

• More supporting research projects on productivity and its determinants