Intellectual Property and Competition

At the level of economic sectors, intellectual property rights increase the average number of competitors. This is due to the fact that more companies are able to survive independently on the market if the economic returns from their own innovations can be easily appropriated. For the given supplier structure, however, it can also be seen that at the micro level of microeconomic decisions own patents contribute to reducing the number of direct competitors for the company's main product.

The estimated results confirm the hypothesis of an "inverted U" for the simultaneous effect of competition on the company's own research expenditure. This means that additional competition with initially low intensity of competition leads to more innovation efforts, whereas with already high intensity of competition it reduces the incentives for own research and development.