This paper examines the association between innovation and the evolution of market structure. A dynamic model of market concentration is applied to seventy-three U.K. industries, 1970-79, and the results are found to be consistent with the hypothesis that innovation is deconcentrating. The results reported here and those contained in earlier work combine to suggest that innovation and changes in market concentration interact in a relatively rapid, mutually reinforcing, but rather weak, spiral of increased innovation and decreasing concentration.
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Geroski et al. (1990) studied this question.
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