Monopoly and corporate innovation: evidence from antitrust law
Nankai Business Review International
ISSN: 2040-8749
Article publication date: 14 October 2021
Issue publication date: 3 February 2022
Abstract
Purpose
There are two opposite views about whether the Antitrust Law is conducive to the development of the economy. One view is that the Antitrust Law can restrain monopoly, maintain market competition and benefit economic growth. The other view is that the Antitrust Law inhibits innovation by monopolistic firms and fosters rent-seeking, which is bad for economic growth. To provide a possible perspective for clarifying the controversy, this paper aims to answer the following two questions: first, will the Antitrust Law inhibit corporate innovation? Second, does the antitrust enforcement agency discriminate against private enterprises?
Design/methodology/approach
Based on the samples of A-share listed companies from 2003 to 2013, the authors use the implementation of China’s Antitrust Law in 2008 as a policy shock, take the monopoly enterprises in each industry as the treatment group and competitive enterprises as the control group, using the difference-in-differences method to test the impact of the implementation of the Antitrust Law on corporate innovation activities.
Findings
The results show that compared with competitive enterprises, the patent output of monopolistic enterprises was significantly reduced after the implementation of the Antitrust Law, which indicates that the Antitrust Law does inhibit the innovation activities of monopolistic enterprises. Further research finds that the innovation suppression effect of the Antitrust Law is more prominent in state-owned enterprises, which means that the government does not have “selective law enforcement” against private enterprises in the process of law enforcement. Therefore, the results provide evidence for the idea that government intervention is neutral.
Originality/value
First, the paper enriches and expands the research on the factors affecting corporate innovation from the perspective of market structure. Second, it enriches and expands relevant research on the consequences of implementing the Antitrust Law from the perspective of corporate innovation. Third, it not only provides the relevant empirical evidence for clarifying the dispute about the Antitrust Law but also is helpful to clarify whether the Chinese Government has “selective law enforcement” against private enterprises.
Keywords
Acknowledgements
This work was supported by the National Natural Science Foundation of China (72172158; 71872137; 71902186), and Humanities and Social Sciences Foundation of Chinese Ministry of Education (19YJA630114).
Citation
Yu, M., Huang, Y., Zhong, H. and Zhang, Q. (2022), "Monopoly and corporate innovation: evidence from antitrust law", Nankai Business Review International, Vol. 13 No. 1, pp. 58-78. https://doi.org/10.1108/NBRI-03-2021-0019
Publisher
:Emerald Publishing Limited
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